Yes, but the other side of the coin of airline deregulation is that there fewer routes to smaller airports and/or they are more costly. There is a large fixed cost associated with providing service to each airport and because of this, airlines have decided to either hike up prices to make the route semi-viable or stop service altogether.
While this may be good for the airline, it's not necessarily good for the people that are now forced to drive multiple hours to the nearest airport.
I would think that something similar would happen if the trains were deregulated.
Having lots of big jets flying 75% empty would mean much higher ticket prices overall. The economics of airliners is such that they need to be full to make money.
I don't have figures handy, but airline fares (adjusting for inflation) are much, much lower today than when the government set routes, schedules and fares.
The hub and spoke system common today evolved out of the deregulation. Smaller airports are served by small "commuter airlines" today, not big empty jets.
Some bigger airports don't have the luxury of being a hub to any airline and get crappy service as a result. Indianapolis has a nice new facility but you're lucky to get a direct flight from other major cities outside the surrounding region. The few that exist are punitively priced at often 2x the cost of connecting through a neighboring hub.
The U.S. partly mitigates this by subsidizing service to smaller airports, via the $250m/yr Essential Air Service program [1]. This was part of the deregulation bill, thrown in to mollify representatives of smaller towns and rural areas, who otherwise would have opposed deregulation.
And not a totally unreasonable approach if the politicians want to maintain a specific capability, much better than making the entire market inefficient.
While this may be good for the airline, it's not necessarily good for the people that are now forced to drive multiple hours to the nearest airport.
I would think that something similar would happen if the trains were deregulated.