“Here are these well-run efficient airlines — people like them, they have low costs — but they can’t get the badly run inefficient airlines to go away,” he said. “In a competitive market, the people with the better-run companies ought to drive the high-cost companies out of business and that just doesn’t work in the airline industry.”...

Severin Borenstein, a professor of public policy at the Haas School of Business at the University of California, Berkeley (and a member of the Department of Transportation’s Future of Aviation Advisory Committee), said that even though low-cost carriers are far more efficient, big legacy airlines benefit from their size advantage in ways that go beyond airport access.

“They are protected by a structure that limits the ability of new entrants to get into markets and to expand,” Mr. Borenstein said, citing frequent flier programs — and the fact that miles earned for business travel are an untaxed employee benefit — as an example of a policy favoring big carriers.

“Frequent flier plans are massively popular,” he said. “And people don’t recognize that they’re reducing competition.”