The next time you’re suffering through a horrible flight—enduring, say, five or six hours at a packed gate waiting for your late connection, or sitting on the tarmac while the 23 planes ahead of yours inch down the taxiway—give a moment’s thought to Alfred Kahn. A retired economics professor at Cornell University who’s still active at the school in his nineties, Kahn is the person most directly responsible for deregulating the U.S. airline industry. As head of the Civil Aeronautics Board, the federal agency that regulated the airlines through the late 1970s, he helped craft legislation that would dismantle the agency and bring competition to the commercial aviation business. Jimmy Carter signed that legislation in October 1978, 30 years ago this month.

In the three decades since, fares have fallen dramatically and consumers now have more choices than ever—more routes, more flights, more aircraft. At the same time, few passengers would say that flying is a pleasant experience right now. Airports are mobbed, planes are older and dirtier, and add-on fees are bordering on the ridiculous. In 2007, more than a quarter of all flights were delayed, resulting in 112 million lost hours for passengers.

The airlines aren’t having much fun either. Southwest still makes money—just barely, thanks to its fuel-hedging program—but everyone else has been in the red for years. The six most established carriers (American Airlines, Continental, Delta, Northwest, United, and US Airways) lost nearly $6 billion in the second quarter of 2008 alone and are projected to lose in excess of $10 billion for the year. Four of those six have been through bankruptcy in the past decade. Virtually all of those bankruptcies happened before the recent runup in fuel prices, though expensive oil only exacerbates the industry’s problems. Prices have come down a bit in the past few months, but a lot of experts think that the airlines will be in trouble as long as oil costs more than $100 a barrel. (View a graphic that details the financials of the major airlines.)

In the midst of this mess, former American Airlines C.E.O. Bob Crandall gave a speech to a group of airline executives in New York City in June that sounded a little like heresy: Crandall essentially called for reregulating the sector. “We have failed to confront the reality that unfettered competition just doesn’t work very well in certain industries,” he said.

Predictably, the speech triggered some intense, and intensely negative, reactions among current airline C.E.O.’s: “The surest way to destroy the airline industry is to have it reregulated,” says Gary Kelly, C.E.O. of Southwest, in an interview. “If your model is not working, let the market forces decide,” says Dave Barger, C.E.O. of JetBlue. Hubert Horan, a consultant and a former executive at Northwest, says, “I’m not aware of anything within a light-year of any form of economic regulation. What’s out there is a bunch of frustrated people, some of whom throw out some half-baked stuff.” (It’s worth noting that most C.E.O.’s were just as strenuously opposed to deregulation back in the 1970s.)

Crandall ran American Airlines from 1980 to 1998, and he’s a bit of an iconoclast. He has long hated the intense competition in the business and the resulting fare wars and turf battles. He once said that in commercial aviation, prices are set not by a company’s costs but by its “dumbest competitor.” Crandall was also known for ruthlessly cutting costs to keep American profitable; in the mid-1980s, he ordered olives removed from the salads served in-flight, a move that saved the company about $100,000 a year.

But on the subject of reregulation, Crandall may be right. “Airlines work with a very distorted supply-demand equation,” he said, and right now that’s manifesting itself in the form of too many flights, too much traffic, and fares that don’t come close to covering an airline’s costs. Worse, the infrastructure—planes, fuel, gates—is extremely expensive and too inflexible to quickly adapt to changes. So any market corrections involve a lot of pain for consumers and a lot of destroyed capital for airlines.