Originally Posted by LAX
I agree. Consoliation amongst "legacy" carriers really don't solve the root of the problem for most of them--high costs. Even if there is a transient decrease in capacity after mergers (thus increasing yield somewhat), LCCs (new or old) would still have lower costs and thus pricing power. Does that really help the airline industry? I don't know, but that's definitely not the "no brainer" solution most analysts seem to think, IMHO.
LAX
I had a chat with an analyst on this topic recently and won her around. The arguments usually focus on something to do with scale--economies of scale. However, when the performance of AMR and UAUA are examined over the past ten years, the size argument looks weak. Carriers seem to hit a ceiling. I am watching CAL closely to see if it can break this tendency.