Also, just to mention, when the 747 first entered service, the upper deck area was a lounge/bar area. Now, it has seats instead of the grand piano and bar for people to stretch their legs and get a drink on those long haul flights.

While this is just a mock up of a potential cabin layout, it really isn't all that far from the truth. The seats were bigger back then and you had more leg room. It wasn't until the fuel prices started to soar higher and higher that things began to change. The profit margin for an airline is actually very small so a difference of a few passengers can make or break a flights profitability. Hence the smaller seats and less legroom. Also, with the rising fuel costs, you started to see some key points of service being taken away. You can't get a deck of cards anymore, the in-flight snack has been significantly reduced if not removed all together, and the drink portions have been reduced if not removed all together. The airlines are no longer competing with service but with lower ticket prices. The industry, in my opinion, was never ready for deregulation. The major carriers had massive salaries and, prior to deregulation, they could pass on the increase in costs to the customer. After deregulation, they couldn't do that anymore. The market was flooded with new, low cost carriers that were putting a strain on the majors. The major carriers where convinced that the government would realize that they made a mistake and return things to normal. They went on massive expansion campaigns to gain access to as many markets as they could so that when things returned to normal, everything would be grandfathered in. It never happened and the major carriers have been struggling with their high costs ever since. While a low cost carrier can do very well in certain markets and can actually thrive, the major carriers still have there size as an advantage and the ability to absorb losses in certain markets where they feel they are being threatened and will use predatory practices to drive the low cost carrier out of the market or to the point where the low cost carrier is in such a bad position that it gets bought out by the major carrier. Since 1978, we have gone from around 7 or 8 major carriers to just 3 or 4. Fuel price is a critical cost for every airline no matter the size.