Ah, if I could run my own airline.... So, of course, provided this was financially viable, I would do things differently!
1. No cattle class. Coach needs to be a lot more comfortable and spacious. There's also room to consider some different seating configurations, perhaps with single seats in some sections for those individual flyers. This would also mean that an upgrade, while desirable, isn't going to be as big of a deal, at least on domestic routes. Also, F should be an experience that is worth all the extra $$$$ people spend on it. I would like to see a true private cabin experience where people can have true privacy.
2. On-demand IFE with decent-sized screens. I always feel like I need a magnifying glass to see those damn screens. Forget the big overhead projectors.
3. In-seat, live, internet connectivity -- either wired or wireless. Power ports at every seat, too. Cell phone service is a good idea, too, but frown on people talking at their seat.
4. Since I can get better-tasting food at SubWay for $5 than on a typical airplane, what about a SubWay in the air?
Or some similar approach to meal preparation. Use the interactive IFE system to let people order what they want and when they want it. The whole FA with the cart going down the aisle is a pain in the butt. How about letting people pre-order a meal in advance, from an expanded menu selection, and have that meal on board, just to be heated or something.
5. Simplified fare structure and restrictions. Non-refundable restricted tickets can be changed at any time (before or after travel has started) as long as there are seats available. First change is free, but subsequent changes incur a small administrative fee. Any tickets are fully transferable.
6. All wide-body planes. Single-aisle planes are cramped and take longer to board and deplane.
7. FF program: Free space-available upgrades for all elites. Miles can be redeemed for any airline -- we'll buy you a ticket on another airline when redeeming miles. You can book awards -- all awards, from upgrades to free flights -- on-line, even if you're not the one flying. No more spending time on-hold with CS.
Some more miscellaneous rambling: the people on here are right -- flying ought to be fun! With all the hassles in getting to/from the airport and getting through security, an airline should do everything it possibly can to make things more pleasant for the customer. A separate section for crying babies. Sorry, but screaming babies is one of my pet peeves.
Ok, I'm going to stop now, or this'll never end.