I believe that US legacy carriers have downgraded their product so much that they cannot differentiate themselves from the LoCos. Southwest & JetBlue arguably offer a better product. (Spirit & Allegiant model themselves on Ryanair). Its interesting how this seems to be the opposite to most other industries which are moving in the other direction. It would be interesting whether one of the 'Big 3' (assuming that AA / US merge) could charge a small premium for a better product.
In carriers airlines such as BA, LH, LX & KL still differentiate themselves but LH are following BA in withdrawing from or spinning off short haul services from non hub airports. LX only has small operations at GVA & BSL. BA & KL are charging extra for baggage for low cost SH point to point tickets. How long until others follow?
One commentator has pointed out is that the great thing with Ryanair is that it has forced the legacies to reduce their fares so that you don't actually have to fly FR (perish the thought) to benefit from them (as long as you live in London).
Whilst some of the difference in price structure is to due to service standards which will be reflected in the ticket price and some from flying from congested hubs - necessary to attract transfer traffic - much is due to the need to overnight aircraft. You need to provide hotels & expenses for two sets of crews to overnight one aircraft away from a crew base. How much would be saved if the legacy carriers outsourced to a company like easyJet with local crews at most bases? (I dare say that there would be a few staff issues to consider!) At LAX SkyWest provides codeshare services for three separate airlines with a separate operation for each. Could this be the way ahead or a step too far for Europe?