I think that's right. Customers have decided that maybe getting charged a couple full fares once every ten years is better than spending 10% extra on every ticket.
Which makes sense. The airlines have decided this as well.
While the capitalist in me agrees with you that this is one the market can sort out (and believe me, I'm going to pay more to not fly Southwest moving forward, at least for 2023), I do think that this is just a case where people are bad at making that calculation. I suspect most people would pay 10% more for even a relatively small reduction in likelihood of this kind of thing happening at Christmas, given the potentially huge costs if it does (missed time with family, being stuck in an airport for days with children, lost payments for hotels and other activities, etc.). People are generally quite poor at properly factoring in low-probability, high-impact events into their decisions, and I think that's happening here.
Now whether the government should step in to protect people from that bias is entirely another question. I would argue yes, but I can very much see the other side that would say to simply let the market sort it out.
For me it means that most customers would happily accept such a disaster once in a lifetime in exchange for, say, 10% ticket price reduction.