One differentiation between LCAs and full service should be airports.
Perhaps airports like LHR and LGW should be reserved for airlines who will allow through-checking of baggage. LTN and STN can be where EZ and FR fight it out. BA and others at LGW then don't have the pressure of the LCAs undercutting their margins and being forced to transfer flights to LHR causing T4 chaos.
BAA could change their fee structure to penalise airlines who don't allow through checking - watch the dust fly as FR leave Gatwick! It might ease the pressure on BA enough to restart ORK-LGW
