With due respect, I find your vision paradoxically short termist and one which the airlines themselves would know paints things in a light which is more favourable to them than they perceive themselves. You seem to think that if a passenger flies GVA-AMS on U2 instead of LX, then LX has only lost one passenger on a relatively minor route. I'm afraid that this is not the way the real aviation industry works outside of textbooks.

What U2 has cost AF and KL is their dominant position in those crucial airports where they were overwhelmingly powerful. It is not the single bum on a single seat which is lost, it is the attractiveness of the national airline in a whole airport, the "obvious choice" value of the national airline for much business customers both to and from a secondary national airport, and with it, significant lost corporate contracts (AF and BA have both lost very significant corporate contracts to U2 in the UK and in France).

What is more, it has cost them margins, including from the main hub (as we all know, there are many routes that KL or AF or IB fly from AMS or CDG or MAD which already used to lose money because O/D demand was not huge but were necessary for hub operations. With U2 attacking them, they become even more significantly loss making and cause the dominant airline to have to rethink how much it can afford to lose on some feeder routes, every day to protect its whole network situation because closing the route means losing some key premium passengers on the network).

So no, it is not just as though U2 acted as a welcome feather duster which enabled the BA and LH of this world to strengthen their position. You are however right that it has forced them to review their labour costs, but that of course comes at a price. BA are talking of a turnover of about 20%. That is huge for an airline. It means lower staff loyalty, a need to run near permanent recruitment operations, train staff (which costs money), agree settlements with the leaving ones (which costs money) and that is before taking into account the consequences of the huge LGW staff salary downgrade (up to 28%) which may well lead to strikes and more.

You mention LH's situation, but frankly, whilst better than AF, it is not really stellar either, and certainly less dominant than a few years ago, especially when you take into account the benefits of the extremely low oil prices (you mentioned external factors having helped low cost airlines' benefits, so it seems only fair to take them into account for majors as well). In short, while you are right to point out that BA and LH are in a much sounder position than AF, as well as in a much sounder position than they were a few years ago, I find it extremely premature to pronounce the TK and EK of this world pretty much dead as you seem to do, or the threat of the low cost European airlines such as U2, DY, and VY over and them being relegated to secondary players. I think it both underestimate their current consolidated strength and their capacity for future innovation, something that they have often proved more gifted for than most majors.

Finally, I think that there is something a little bit paradoxical in pronouncing ME3 dead whilst singing the praises of the European majors' revival. As we all know, QR and EY have progressively set a firm foot on European soil. You may question how difficult it might be for EY to turn AZ around, but as you know, QR now owns 10% of IAG (BA+IB+VY) and is already intending to increase its share so there seems a bit of a paradox in saying that one would thrive and the other collapse when the latter has already become one of the leading shareholders of the former!