Southwest is pretty big domestically, so it's more like 3.5 major carriers

I agree that FF programs are being devalued, and I agree that a wave of LCC's or even some "regular" airlines will come, since overall capacity is probably reduced, compared to before the DL/NW, UA/CO, AA/US mergers.

I think that not only FFers will be disappointed with the new pay-for-everything flying experience, but also less frequent flyers who can reminisce about "how it used to be" and will be tempted to try a new airline, if one will be available, since their familiar airline gives them less for more.

It seems like a wave:
Lots of carriers and fierce competition drive prices down, capacity up, and airlines pull out all the stops to make their customers happy.
All this, however, leads to lower revenues and profits and eventually drives some of them into bankruptcy, which causes mergers and buyouts, reducing the number of carriers.
This, in turn, reduces competition, thus causing prices to go up, passengers get frustrated, and dreams of new carriers are born.