I agree with Jello. This CNN article puts a very tabby, populist spin on the basic return-to-profitability strategy that the airlines have been executing for the last few years. For more mature coverage, consider this:
In the past 18 months America's biggest airlines have shown signs of life after a near-death experience in the aftermath of the attacks on September 11th 2001. At one time or another, four out of the “big six” network carriers succumbed to Chapter 11 bankruptcy protection and as late as 2006 nearly half the seating capacity in America belonged to airlines in Chapter 11. But since then booming demand for travel, along with the painful cost and capacity reductions of the past few years, have given America's airlines surging profits and the fastest-improving yields in the industry. Now, led by merger talks between Delta and Northwest, the third- and fifth-largest airlines, it suddenly looks as if an often predicted, but never realised, wave of consolidation is about to hit American aviation—but only if competition regulators allow it.
One reason is that the recovery in the airlines' fortunes is fleeting and superficial ...
Nor should fears about reduced competition weigh too heavily with regulators. For one thing, these days the big American carriers barely compete head-to-head. In a Delta/Northwest combination, or a later deal between United and Continental, less than 5% of their total seats compete with each other. Nor would either deal create much new pricing power. Even before any cuts in overlapping services, neither would have a market share of more than 24%. In domestic North American markets, low-cost operators, which now account for 30% of seat capacity, would continue to exert downward price pressure. And the “open skies” treaty with the European Union that comes into force at the end of next month should intensify intercontinental competition.
