The point I think you're missing is that almost EVERY major industry acts somewhat as an oligopoly. The previous situation where you had something like a dozen major players in a $100+ billion business was quite unusual. A smaller number of competitors is a much more common economic arrangement. Remember, even in these flush times for airlines, their profit margin is only 2%. Are you going to seriously argue that these are windfall profits that demand government intervention? Obviously the AA/US merger isn't really any different than the previously approved combinations (indeed, these 2 carriers hardly "compete" against each other today, unlike say AirTran and Southwest). Should it be our national policy that airlines aren't allowed to make any money?

I'd also note the huge fact that almost nobody, including you, is considering int'l competition. It is laughable to think the US airlines have any monopoly on international routes. Indeed, going forward, it seems likely that the US airlines are fairly weak int'l competitors. I mean, do you prefer to fly them? It is certainly in our national interest to have 3 strong int'l airlines.

Yeah, for an individual looking to invest in airlines, I wouldn't worry too much about dividends. In the past 5 years, dividend paying airlines (aka LUV) have greatly underperformed their peers. That said, more airlines like DAL are now paying dividends, because they're starting to accumulate more cash than they feel they need. Personally, in most situations, I'd generally prefer if they paid down their debt more. The only real benefit of a dividend is that it can prevent truly silly pricing -- like when LCC stock was worth only a couple of bucks a year or two ago. A small dividend would have amounted to an inconsequential cash expenditure for the airline and would have protected the company's owners (the shareholders) from silly momentum trading moves.