But it's ok with you that they buy up all the slots so competitors can't operate... just so as long as they burn fuel while they do it?
As I’ve answered elsewhere: burning fuel (and sustaining other operating costs) while they squat on slots ultimately ensures that squatting on too grand a scale and/or for too long will result in bankruptcy and thus ensures that the system is self-correcting (by limiting incumbent advantage).
If you just give fines to companies that don't run flights on routes then you can impose a penalty without incentivising empty or near-empty flights.
Excellent idea! So now you only have two more problems: lobbyists being paid to influence the fines (so that they don’t cause their clients so much harm as to make their anti-competitive strategies unprofitable); and regulatory capture (where regulatory bodies become beholden to those whom they regulate).
Those are already problems with aviation, so that's nothing new. The existing rules didn't emerge from primordial ooze, they were also influenced by lobbyists and have certain effects.
The threat of regulatory capture is present with every regulatory solution.
If the fine is larger than the price of the fuel then they'll just fly the flights.
If they buy up all of the slots and then fly them, customers can take the flights. The goal isn't to (necessarily) to ensure that competitors can operate, it's to ensure that passengers have flights they can travel on.