What would regulation entail? Simply, the airlines would be told what routes to fly, and at what price. Given existing passenger demand, the airlines would have to accommodate the traffic, rather than creating it via incentives (long gone are the $99 LAX-NYC flights, with free-flowing champagne and gourmet meals).
Southwest wouldn't have more of a price advantage than American Airlines, but the former would probably be less profitable since they'd have to deviate from their short hop mantra (locally .. who wants to endure the grief of DFW airport when you can enjoy yourself at DAL (Love Field)? Then again, American still finds it impossible to turn a plane in less than an hour, while Southwest has the twenty (20) minute turn down to a science.
Regulation/deregulation isn't something that can be turned on or off like a switch, but I suspect that's due to incompetence more so than feasibility. Let's assume the FAA mandates the return to regulation on 1.1.2010 .. this would give everyone more than enough time to plan the routes, sell the tickets, staff the facilities, etc.
One comment J-B made astounded me: "there are seldom more than 28 different fares on any given flight". Twenty eight?? In the regulated days, there were apparently four ticket prices on a given flight: First Class, Full-Fare Coach and two (2) discounted coach fares. Why the airlines have so many different fares has been written about ad nauseum, but I still find the number 28 absurdly high .. complexity leading to increased cost and all that rot. Certainly, there's a subset of the public who takes great glee in excavating the lowest possible fare between points (using the airline's own silly rules* against them) but I suspect they're truly in the obscure minority.
* hidden city fares come to mind as one exampleHonestly, I can't see the return to regulation in my lifetime. The US air travel system is so horribly broken (with enough politics to make even Karl Christian Rove go batty) that it cannot be fixed. Ever.
PS to Geoff: regulation would most certainly not fix ORD (Chicago O'Hare). Suggest you hub through CVG (Cincinnati) in the future, when making the LHR-SEA run.