First of all kids no longer fly free, unless they are under two years old and sit on a an adult's lap. If you have a car seat and want to strap them in, you will most likely pay the adult fare for that seat.
The current controversy is that American Airlines is charging families to sit together.
They charge extra for aisle and window seats, so if you need two or three seats together, you have to pay extra. If you've flown on American Airlines lately, you can hear finger nails scraping down the blackboard as they are slowing going under cutting every way they can. (Serving water out of gallon jugs? Really!)
Their approach seems to be: “How can we make more money and not go belly up?” I'm guessing that's at the root of making families with small children pay extra.
But, as the airlines continue to gouge passengers for every little extra so they can make an extra buck, other airlines could follow American's lead and most likely will.
However, some airlines still discount seats for children under the age of 12, but the charges are not uniform between airlines so you need to check with individual carriers.
For great advice on traveling with children, check out this link.