Ombudsmen are used in many industries, or tribunals, or arbitration services. I don't see why such a concept can't be transported to the airline world. I'm sure that airlines, passenger groups and unions would be prepared to subscribe to fund a suitable group, given that the alternative is paying substantial legal fees. Make it a branch of the CAA in the UK, perhaps, but with substantial autonomy - perhaps like CHIRP.
There is a better system than capitalism, and a better one than democracy - unfortunately, it requires a radical change within people that they aren't able to bring about themselves before it works.