I *DO NOT* want to get into economic theory here, but let's for a moment consider the "laws" of supply and demand. In US, the markets for "greyhound in the sky" create an incentive for all airlines (not just the cut-raters) to fill seats with those bodies.

As the savvy business traveller can now "beat the system" and travel at sub-economy class rates, the level of service provided has slipped as well. And since we are paying $230 to fly JFK-LAX, no one is screaming TOO loudly that they have to pay for a drink to do it.

The lack of the Greyhound effect (as I call it) in Eurpoe has spared air travellers there from a similar fate. With the relatively small geography and extensive passenger rail system as well as the intra-EU rivalries (that's you, Merry!), Eurpoeans have no real need for inexpensive flights for leisure travel, and so flying caters to a different market at a greater expense, hence the ability provide more service.

But when it becomes cheaper to fly Heathrow-JFK-Stockholm than flying Heathrow-Stockholm, the economic model may well collapse under its own weight...And perhaps realizing this, the EU and others limit slots to artifically limit supply of US carriers (this last bit may be a bit of a stretch).

I used to work aviation subcommittee issues on Capitol Hill, and there was a great deal of internal debate about this issue during deregulation hearings. It really is an interesting (if somewhat dry) subject!