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Same thing that happened last time we had a large round of mergers. In the short term, it will look good on paper. But fares will skyrocket and service will plunge. Witness what happened (for those of you old enough to remember it) on the West Coast back in 1989. The low cost carriers of the day (AirCal and PSA) were bought out by American and USAir (kind of ironic now that you think about it). BACK THEN, the fare between LAX and SFO soared to about $200 EACH WAY.
Why? Because they could. The competition was bought out and/or chased out of town. In the short term, the airlines and their shareholders were THRILLED. But fleecing the public like that is and was not a viable long term strategy. So what happened? An economic downturn came, the first Gulf War broke out and overnight, people literally stopped flying. The airlines simply couldn't afford that since their balance sheets were already bloated to the gills between the orgy of mergers, mismatched fleets, and tons of new planes.
So service took a hit. Planes were grounded. In 1991 ALONE, we had three major airlines go out of business (Pan Am, Midway, and Eastern). Continental was literally within hours of being the fourth. Both TWA and Northwest spent all of 1992 and 1993 on Death Watch. The rest went into retrenchment mode. And so-called pent up demand began to take shape. So, as what happened immediately following Deregulation, a new crop of upstart airlines sprang up and gave the Majors a run for their money by depressing fares which in turn help paved the way for where we are today.
I expect a similar pattern repeat. As the big get bigger, service-as abysmal as it is now-will get worse before it gets better. The flying public will tolerate an awful lot to save a buck. But at some point, even todays penny chasing flyers will reach a point to where they've had enough. The economy is dangerously on the brink and if it takes another nosedive, expect the resultant drop in traffic combined with the backlash to put at least ONE of the Majors out of business. Just because we haven't had a major airline shutdown in recent years doesn't mean that it can't (or won't) happen again.
And expect to see yet a third round of upstart airlines take wing. And as always, most will have a life expectancy of five years or less.
(A) certainly not in the interest of the flying public, as one more competitor is removed from the industry which means larger industry concentrations by fewer carriers and that's most likley to mean fewer flights but higher fares.
(B) probably in the interest of the taxpayers in the sense that there's got to be less likelihood of another failure/bankrupcy in the industry since this merger will result in more revenue for fewer companies, though it's no guarantee that the in dustry can't yet screw it up again, e.g., price wars to increase market share, extravagant/unwise union contracts with employees, just bad financial management, etc
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