The airline industry in the early 21st century will be greatly different from that in the latter part of the 20th.
I would forecast that the 'full service' carriers will disappear completely from short and medium haul markets. Air travel will become much more of a mass transit thing - you don't get fed or provided with movies on most buses or trains, so why should you on aircraft? People don't need
the frills, and they just cost the airlines a lot of money.
Ultra-short hops in the US will also disappear ... it will be easier to drive rather than going through the current level of security.
In the States and Europe, it's the 'full-service' majors that are haemorhaging red ink - looking at today's ATW Online, I see UAL lost US$341 million in the second quarter, though without special items that increases to US$392m. http://www.atwonline.com/indexfull.cfm?newsid=2107
; USAirways lost US$248 million and says that bankruptcy is very much on the cards http://www.atwonline.com/indexfull.cfm?newsid=2108
; whereas on this side of the pond DBA (which is being taken over by easyJet) has had a strong increase in traffic and Lufthansa partner Eurowings has said that it is looking at entering the LCA (low cost airline) market. http://www.atwonline.com/indexfull.cfm?newsid=2110
A quick glance at who is making money and who is losing it shows Southwest and its clones making it big time on both sides of the Atlantic ... and full service carriers losing it equally big.
I don't believe that the new generation of true LCAs will leave their niche mass transit markets as has been suggested on this thread. Various airlines - such as Debonair here in the UK - have tried to offer a full service product at low fares but the reality is that it just doesn't work ... a fact that is borne out by their disappearance from the marketplace.
Nor are the LCA airlines "small" - after all, easyJet is looking at ordering 150 new aircraft, and Ryanair has already done the same.
The LCA model simply doesn't work for long haul markets, as it relies on cramming in as many sectors a day as possible - so that a B737 operated by an LCA might be carrying double or more passengers than a FSA one, over the course of a day. In order to offer really low fares, an airline has to either offer a premium product which effectively subsidises the low fares; or alternatively it needs to cram in as many people as possible (giving the sort of charter configurations we see in Europe).
Personally, I believe that a quality product at a reasonable (rather than low) price is likely to be the way of the future. I suspect that a lot of the gimmicks - such as PTVs - will become 'pay as you go' features, at least in economy.
Already, we are seeing First Class being removed from many long haul carriers, to be replaced by a premium business class; supplemented by a 'premium economy' product which bears a startling resemblance to the original business classes back in the 1970s! Personally, I believe that such product differentiation is wasteful - much better to go two class and have done with it.
As for single class premium airlines, I am undecided. Many years ago I worked on a start-up called British Atlantic, which subsequently became Virgin Atlantic. BAA's plan was to operate DC10-30s LGW-JFK in a 150 seat all J configuration. It might have worked then ... however I doubt it would work today, where the premium market is fickle and brand-loyal, thanks to the FFPs. The only viable way I can see that happening is if it is done by a major airline - such as LH with their BBJ; or Qatar Airways with their A-CJ; and only on the densest premium routes. I recall that Virgin mooted something similar a while back. The reality, though, is that thanks to the current security situation those people with serious money would rather use their own or a fractional-ownership business jet; or save time through the use of Concorde.