I'm absolutely certain they would. Monopolies are incredibly profitable, after all, and a repeatable strategy for killing off all newcomers is step zero.

I.e., that government rule was created to address a rational but pathological behavior in a market.

Lufthansa could always not fly those routes. But then the business would lose money to fines, possibly lose gates, and maybe go bankrupt.

So, yes, in the name of the business. And of course that business's behavior is completely predictable.

Anyways.

Pointing fingers at isms is a waste of time. Businesses operate in markets. Markets are human inventions. Especially in the case of something like an airline, a Market is a Market in the Stock Market sense not in the Bazaar sense.

The question is: how do we modify market rules without re-introducing the aforementioned pathology?

Which is a REALLY hard question! The simplest solution, from a market perspective, might be charging a fair price for carbon, such that this sort of behavior is no longer rational. Of course, that's a non-started politically, so... here we are.