Would it help if the concern were expressed as regulation being a constraint on supply? There’s not really an economic distinction to be made here: If regulations demand all airplanes be painted with an expensive shade of neon pink, on the margin fewer planes can be built for the same capital investment and all else being equal supply will decline.
If the regulations are arbitrary and pointless of course.
OTH if they for instance increase safety longterm you might expect demand for air travel to increase.
Air travel _is_ a commodity though.
Have you read the article? It makes some solid arguments why it isn't. I mean the existence of points programs and all the different fare codes and conditions is a pretty good indication that it isn't.
The funny thing is that this is being brought up again and again as an argument against regulation. You'd think the smart business people would know some economics, so they are either lying or not that smart.