Making flying even crappier doesn't seem like a good idea to me.
Regulations that put a floor on how crappy airlines can be should be pretty neutral on competition since all the airlines would have the same rules.
That's not to say all rules are a good idea, even rules that raise quality -- raising the floor raises prices, and if the floor is raised higher than necessary, prices are higher than necessary too, making flying less affordable. Set the floor too low and people fly less because it's too crappy. Set the floor too high and people fly less because it's too expensive. You're looking for the balance point.
IMO, the floor is too low right now. I think it's a mistake to try to lower it.
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