Originally Posted by AndyTLe

Bankruptcy brought costs down CLOSE but not to the level of LCCs and it will never be as DL works a different model (Hub and Spoke instead of Point to Point.) When rebuffed the advances of US, DL was still in bankruptcy and made a case that the new DL would have a higher value than what US was offering. NOW, it is known that DL's valuation estimates were off, largely in part due to $100 oil which eats into DL's profits.

Southwest is the only LCC that is a point to point airline. Air Tran, Jet Blue, Frontier are all hub and spoke. Delta stated that they had a viable business model going alone and oil at that time was close to $100 bl. There would have been greater cost savings if Delta had been bought out by US Airways when Delta was still in Bankruptcy but that is all pie in the sky now since the shoe is on the other foot.

A merged airlines will have greater purchasing power as everything they are buying will grow in scale. It also allow the airlines to more easily increase fares. Instead of having competing flights, they can right-size capacity to increase efficiency through better aircraft utilization (which reduces fuel, wages, etc).

Delta is large enough to have maximized purchasing power. Growing even larger will unlikely yield better prices then what they are paying now. Delta and the other legacy airlines have been optimizing aircraft utilization (their 767-400's are working European routes) and shrinking capacity where it makes sense (Delta is cutting back capacity by 4% this year). The only cost savings a merger would accomplish would be in the back office. Delta has stated to its employees and NW's employee's that no front line jobs will be eliminated. Airfares can only be increased to a certain point before the LCC's move in or people stop flying that has started to happen. A merger would do little if anything to change these dynamics.

Airline deregulation has worked out great for the most part, we have tons of carriers now, LCCs have come in provided consumers with choice. But government re-regulation isn't' the way to go. That doesn't allow the market to self-select.