RustyC,

Very good points. I was thinking while driving home yesterday about the consequences of the FAA grounding and the impact on various airlines. The new security rules will decrease aircraft utilization rates.

Already, Midway has closed up and TWA would most likely have too if AA had not acquired it.

In addition to CO, some weaker airlines like US could be put into a more serious financial bind (due to the proportion of its flights that are short hops). WN, though strong now, could see its business model destroyed by longer turnaround times if each plane is thoroughly checked before each flight.

Every airline that merges or goes bamnkrupt will decrease competition. The reasons for industry consolidation from journals like the Economist are the same ones that investment bankers use to justify mergers to senior management: market discipline. By controlling capacity with much fewer players, you control supply and hence to a large degree control prices.

If we see the Big 3 end up controlling 75% of the market, say goodbye to competitive fares and frequent flyer benefits.