you know, i'm not sure that the number of people that fly would decrease dramatically. It definately would decrease, but by how much is the question.
Gas prices have been increasing more and more, but are people driving less? Some, but most people drive the same amount, and look how well the oil companys are doing because of it.
The employees can work for free and the airlines would still lose money by trying to undercut each other.
More people flying does mean more jobs, but quality and quantity need to be properly balanced.