I hate flying, and yet I work for a travel company (but not an airline). The airline business is one of the few I know where its customers are lied to about prices, treated like cattle, shoveled into tiny spaces too small for a toilet with minimal air, forced to sit and tolerate whatever happens, not to mention all the groping and nude scanning of the TSA. While other businesses try to compete with quality and customer care attempting to own us for life because we love them, the airline industry could care less.
Now take the PC industry, or even the phone industry before the iPhone. It's a race to the bottom to see who can build the cheapest crap. Innovation is pushing the price lower than the other guys can do it.
Now look at Apple. They created products that people wanted (or even lusted after) but cost more and they didn't really care about price competition. Steve Jobs pushed the company to create the best stuff possible despite all the competitors and pundits who initially laughed at Apple. Yet today Apple is the most valuable company in the world, selling quality products at a higher price that people actually want to own.
You may not like Apple at all, but you can't ignore the success despite doing exactly the opposite of the industry. Now compare them to the airline industry. Apple is worth more money than all the airlines in the world. Their cash hoard is greater than the value of all the airlines in the world. They got that way by refusing to fall for the price trap.
The problem with airlines is that people have been conditioned to compare airline flights on price. Other than a few (Southwest for one) you can find most airlines on most OTA (Online Travel Aggregators) sites and easily compare things. Yet the prices are often a lie, with baggage fees and all the attempts to get more money from you not included in the price (and might be difficult to even calculate, do you really know ahead of time how many bags you might have?). So the airlines push and pull the prices and availability in tandem, hoping that enough people won't notice how little difference there is. It's the same pull towards zero you see in the App Store. The more consumers think of you as nothing but a commodity and can compare you to all the competition in a nice list, the less price difference there is.
In the end the difference between the airlines and Apple is that airlines can't make money, and Apple can't even spend all the profit they get.
Could an airline that provided a better customer experience and comfort, at a higher price, survive? Maybe, it's been tried and failed so it's hard to say. I think you would have to be standalone, like Southwest, so that easy comparison to the commodity airlines wouldn't happen. The quality of what you get would have to be markedly different, so that the others couldn't just upgrade their peanuts to compete. Clearly the company would have to be focused on the whole business and control as much as they could so that even with the price higher it wouldn't be ridiculous.
I have a flight coming up where I am paying $500 for a crappy seat I don't fit in (2 meters tall) and there were no other options available. How is this choice? I would pay more if it were comfortable and I knew the airline cared about my experience but no such airline exists. Unless you are a top platinum type customer you are really nothing more than a cow to all the airlines. Someday I think I will moo loudly once we are airborne.
There must be a way to build an airline which can compete at a better price level offering a better experience. People are building spacelines already yet we can't even perfect the airline. Most airlines are hurting and everyone is assimilating; someday we might have a choice of one airline, and it will suck.
I've always expect the future of air travel to be planes full of tubes; we get plopped into a tube at the top when we start, and sucked out the bottom at the destination.
I'm just a programmer, and I may be naive about airlines as a business (I know way too much now about the reservation end of it) but if a "small fruit company" can find a way to become the world's largest purveyor of high quality computer and consumer products, surely someone can make a airline that doesn't make people want to moo.