Why do people refer to "deregulation" as though it is some kind of entity? Deregulation is a verb, not a noun. It was something that occurred, not something that exists.
That said, deregulation worked just fine. It did exactly what it was supposed to do: It allowed airlines to compete compete, succeed, (and fail) in the market place on its own merits. It made air transportation more accessible to the general public, and provided more choices for the consumer. It must also be said that it created more opportunities for pilots (and other employees) than ever existed during the regulated era. Following the act of dereulation, airlines expanded to more than twice their size, increasing the number of jobs. There are pilots at the majors today who have enjoyed entire careers of relative sucess and prosperity because of the act of deregulation
Thee "problem" was not with deregulation. It was with the incumbents who would not or could not adapt to free market competition. On this point, both management and labor share the blame. On the management side, you had guys like Frank Lorenzo who's entire strategy rested on cost-cutting and undercutting the industry; not realizing that such a strategy has practical limits beyond which you end up with a poor operation and a poor product. On the labor side, you had organizations like the IAM at Eastern, that simply refused to accept the changes in the competitive landscape, and demanded top dollar, regardless of whether or not the market supported it. Both parties shoulder their fair share of blame in this particular example.
From the perspective of a consumer, I can tell you that I can fly pretty much anywhere in this country, for what I consider to be a reasonable fare. That was the point of deregulation: market competitive fares and service options.
It's not the consumers' fault that the airlines can't figure out how to make money at it. Perhaps when the last of the "old guard" (airlines, management, and labor) is gone, the airlines who were born in the deregulated era will have better success.