Fair enough: but you're asking that they trade a more profitable flight for a less profitable flight, in order to try to balance the infrastructure utilization. It's almost a tragedy of the commons situation -- each airline has an incentive to schedule its flights for the peak times. Although -- that's really only true to a degree, because airplanes idling on the ground are losing money, not making it. When you see UA schedule a flight for 90 minutes in the morning and 150 minutes in the afternoon, what you're really seeing is an hour in the afternoon where that plane is burning money like so much jet fuel.

And, to address your specific point: the airlines actually do trim their schedules dramatically for holidays. They keep some flights; partially due to necessary aircraft and crew movements, and partially for the health of their overall network. If you need to fly on Christmas, and you can't fly UA because they've cut the flight for profitability, you may not fly them on your next trip either. But, schedules are dramatically reduced.

Furthermore, they are absolutely in the business of cutting their least profitable flights. UA may well have been making money on LAX-SIN, but they could make more money operating a second SFO-SIN flight. The same thing is true for dropped destinations like BKK: UA may well have been making money on the BKK flight, but they found that they could make more money by reallocating that plane elsewhere.

As for the loyalty program, if you don't think that's being managed for optimal profitability, we're watching a different airline.
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The congestion is magnified on a day like we had last week, but that's a bad example for your scenario, frankly -- having 25% fewer flights during the day wouldn't have made any difference. Your proposal would be most useful on days where there wasn't any big weather system, as that's when a small decrease in the number of flights might make a difference.

Of course, this goes right back to the other points that you mentioned -- if daytime operations are more valuable, and airline A moves more operations to the nighttime in order to try to have a more stable operation, airline B will add additional daytime flights to soak up the excess demand.

In fact, you actually have it exactly backwards. It's competition, not lack of competition, that causes the infrastructure to be stressed during the (more profitable) days and relatively deserted during the (less profitable) nights. If there were no competition -- for example, if the US were to slot-regulate more airports -- airlines would move their flights to unpopular times because passengers would have no choice but to fly then. Because the airlines can compete, they do.

I should also point out that the skies are far from empty at night. Cargo airlines often fly the majority of their schedules at night, both for business reasons -- next day package delivery -- and because the infrastructure is less crowded, landing fees are lower, etc.

The jury is still out on the long-term viability of the revamped mileage programs. Let's see what happens during the next downturn.

DL would cancel SkyMiles in an instant if they thought that the competition would follow suit. Luckily, though, MileagePlus is a major profit center for UA thanks to the relationship with Chase, and DL knows this. (I may be wrong, but I don't think the Amex/SkyMiles combination is nearly as profitable due to the relative unpopularity of Amex with consumers).

Very few, though. Contrary to popular opinion, the US extends beyond New York, Boston, Chicago, and DC. Airlines have been growing mostly by adding flights into alternative airports, in part due to congestion but in larger part due to cost. JetBlue is a perfect example. With the exception of the JFK slots, they mostly grew via the RyanAir model -- serving Long Beach instead of LAX and Fort Lauderdale instead of Miami. Allegiant takes it even further.

RyanAir is a great example: people would rather fly during the day from out-of-the-way airports than fly at night from the major airports. Otherwise -- they'd offer flights between major airports at night.

As for connecting flights -- you're right; offering connections has been a great way for the legacy airlines to segment their traffic. They can't stay afloat with only connecting passengers, but they can't get enough (higher fare) nonstop passengers to fill their planes. They need both, not because they're creating demand, but because they're catering to demand -- some passengers demand low fares, and some passengers demand convenience.

^ Well, now we have a place for that re-visititation to occur.