A couple of days ago, my colleague Tom Johansmeyer reported that American Airlines (AMR) is going to start charging $8 for a pillow and a blanket on flights lasting more than two hours. Tom noted that AMR has become "about as low-rent as one could imagine." Well, get ready to hold an even lower opinion of AMR as late Wenesday it announced that it is going to start charging $50 for coach standby.

The airline announced that the only people able to fly standby for free starting February 22 will be "elite frequent fliers, travelers in first or business class, military personnel and people who bought pricey coach tickets." Anyone else switching flights on their day of travel will be paying $50 to get a "confirmed seat."

Continental Airlines (NYSE: CAL) just got the relief it needs to compete. Despite resistance from the Department of Justice (which can only recommend), the Department of Transportation has granted the airline immunity from antitrust laws. This clears the way for Continental to work with United Airlines (NASDAQ: UAUA) -- and other carriers -- on international routes. Now, the airline can join Star Alliance, which already has antitrust immunity.

At the same time, DOT approved a joint venture among Continental, United, Lufthansa (OTC: DLAKY) and Air Canada. This new relationship would involve trans-Atlantic routes.

What's holding the airline sector back, in addition to high jet fuel prices, and keeping the likes of AMR's (NYSE: AMR) American, Delta (NYSE: DAL), UAL's (NYSE: UAUA) United, Southwest (NYSE: LUV), and Continental Airlines (NYSE: CAL) from realizing their potential?

Many economists and analysts would agree that, along with other infrastructure and related investments, the nation's air traffic control system must be upgraded, if the United States seeks an air transportation system capable of maintaining a high level of safety -- and better service -- in the 21st century's more-crowded skies.

Further, that the United States has not already replaced an essentially generation-old air traffic control technology with a modern system is a serious demerit, and one that has -- through delays, cancellations, and other problems -- taken a toll on the flying public and the major carriers.