>>>>AAI is a profitable airline and SWA is not, and well it would just bring down AAI>>>>

I wouldn't get too excited about making $10 million in a third quarter. When the economy finally recovers things will turn around for everybody.

>>>>SWA has lost it buying power, they couldn't even convince a regional airline to sell that was bankrupt. Lots of red ink from SWA right now,>>>>>

Nope. SWA wasn't interested in repeating LCCs mistake, despite opinions to the contrary.

>>>>>> Bags fly for free but the ticket price is the same as if your bag was checked, passengers can figure this out too.>>>>

The key is cost structure and market control. SWA still has significant cost structure advantage over almost--but obviously not all--its rivals. A quick look at the quarterly reports shows that ( Note: don't forget to look at the stage lengths when comparing numbers)
The markets also figure into the profit equation. Hotly contested markets have slim margins. Eventually, all markets in the domestic US will be--even Charlotte.
Passengers can indeed figure out which airlines are going to take more of their money to fly them around, and they're getting smarter every day.