NorthernGoose admirable in theory but in reality it would be unworkable to define the parameters and impossible to police them. It also removes the element of competition which airlines should be able to offer, although competition is, or should be, about more than just price.
The cheapest carriers, by far, on the long haul route I fly most often are Iberia and Emirates. There is no way I would use those carriers. I may not be typical but I buy by convenience and service level, and personal preference too, I would, all other things being equal, and they rarely are, travel on KLM because I like the Dutch, rather than Air France, because I don't like the French. I would also rather connect at Schiphol than at CDG. Price is a factor, but not a main one.
As others have said, the policing needs to be around the airlines flying and maintenance standards, not its pricing policy, even if there is obviously a crossover.