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The third world airlines are generally subsidized by the local governments to maintain connectivity.
The EU deregulated its airline industry about two decades after the USA and it is going down the same path. Some flag carriers have gone out of business and the market is becoming saturated with low cost airlines that make Southwest feel like luxury in comparison. Even then, the EU has benefits that the USA doesn't have like no fuel tax and plenty of airports in comparison to the USA.
Just do whatever needs to happen to fix it. I don't care. I shouldn't be in misery flying from coast to coast and in luxury flying from Vietnam to Thailand. It's bullshit that the country that invented air travel has airlines this bad.