Call me as crazy as World Traveler, but I am having a moment of insight so here goes:
History tends to repeat itself. If one were to reflect on the history of the U.S. airline industry in the era of post-deregulation, one would recall that the era shortly after 1978, was a time when a proliferation of up-start carriers took to the skies. The legacy carriers at the time struggled to compete against the likes of Midway Airlines, People Express, Air Florida, America West, World Airways, etc. During that time, Braniff ceased operations.
Following that period, the industry underwent a period of consolidation in which CO mergerd with Texas International (TI), UA purchased PA's Asia routes, AA acquired EA's Latin America routes, DL acquired WA, US acquired PS and PI, AA acquired Air Cal (OC), NWA acquired RC, TW acquired OZ, and CO acquired/merged the assets of PE, FL, and NY. Shortly after that time, fares increased and the industry underwent a period of stabilization.
During the early 1990's, US retreated back east, PA and TW sold their Heathrow routes to UA and AA respectively, DL acquired PA's trans-atlantic routes; and Midway, PA, and EA ceased operations. UA also acquired PA's Latin America routes. The U.S. economy peaked during the mid-1990s and the airline industry went through what was perhaps its most prosperous period in history.
The new millenium brought a wave of LCC's with it including Jet Blue, the further expansion of SWA, Air Tran, Frontier, and Spirit. The legacies once again struggled to compete. Then 9/11 happened. The economy and industry tanked. US, UA, DL, NW, TZ, AQ, HA, ended up in Chapter 11. As those airlines have started to emerge, fare rationality has returned to the industry, which brings us to the next wave: Consolidation. HP has helped to bring US out of bankruptcy and the two are in the process of merging operations. NW and DL are still in bankruptcy.
AA and UA have a long history of being neck-to-neck fierce competitors. It is no secret that AA would love to have the presence that UA enjoys in Asia. Conversely, it is equally important that UA grab a larger piece of the pie in Latin America as well as the NYC market. Latin America, and NYC, combined with the lack of a hub presence in the southeastern U.S., leaves a gaping hole in United's otherwise, well-positioned GLOBAL route network (contrary to how WT defines "global").
AA has made tremendous progress in reducing their costs and positioning themselves to be in the marketplace for the long-term. UA, chose a different route, using the bankruptcy process to restructure. I firmly believe that the two largest carriers will remain in the marketplace for years to come. But at whose expense?
This is the point where my world and WT's world differ. If I were to call it, and while there has been much speculation about a UA-CO combination (largely on the part of both carriers' rank-and-file employees), my vision sees the industry further consolidating with AA getting its long-awaited Asia routes (from NWA) and United successfully filling the gap in its network, mainly, NYC and Latin America, through a combination with DL. UA and AA have probably, the best brand recognition world-wide, regardless of the fact that CO may serve more destinations throughout the world. It is important to consider that much of CO's international route network involves thin routes to both Asia (through Guam) and Europe (through EWR). Likewise, DL has hub operations in considerably smaller markets (SLC and CVG) than does UA at SFO, LAX, ORD, and IAD, along with a powerful franchise at NRT in the Pacific and LHR and FRA in Europe.
Furthermore, HP has its hands full with trying to merge the operations of the larger US, and CO, for the most part, is holding its own. So there it is. That is how I see the outpicturing of the next phase of U.S. airline consolidaton: AA acquiring the assets of NW, UA acquiring the assets of DL, and US/HP and CO largely remaining independent stand-alone carriers.
I could be way off, but food for thought...
