Maybe they would have been more profitable if they weren't funneling $1 million every year into their CEO's pocket?

Because at the end of the day, "profits down to 0" also means things like "reserve capacity down to 0", "safety margins down to 0", and "any aspect of the experience that makes it less miserable than being crammed into the cargo pen down to 0".

A modest regulated profit could result in a healthier industry-- one where the least economic hiccup doesn't cause carriers to shut down with limited notice, where they can afford to not play chicken with hours-of-service laws and maintenance standards, and where people don't get promotions for trying to sell the idea of standing-room tickets.

Because of the "grifty addons" part. Is that not obvious? This situation is not ideal.

The end goal is not letting the airline cancel the ticket of the lowest paid passenger when they overbook, for one example. An efficient market simply doesn't serve the people who can't pay enough to be attractive customers: it makes poor people either pay more or not fly. It can also change those rules on the fly by e.g. cancelling flights without enough passengers booked, or selecting the person with the lowest value customer profile to bump when a flight is overbooked.

Regulations are usually introduced when people realize that the very efficient corporate choice like 'cancel underbooked flights, sell as many tickets as we can for each flight and bump the lowest paying passengers at boarding time' really screws over passengers. In the US, this is accompanied by giant waterfalls of public money being spent on the infrastructure required by airlines to cover the overhead that is mandated, like airports and air traffic controllers.