Hmmm ... a simple test for any MBAs out there:
Business problem #1: Revenue is plummeting because way too few people are flying.
Solution #1: Bring passengers back into your planes.
Method #1: Reduce mediocre service to no service at all, maintain fares at current level or raise them, provide zero new incentive for people to fly.
Business problem #2: Somehow, this strategy isn't fixing Business Problem #1. What's going wrong?