The Airlines argue that the recent merger is good for business but any business expert will tell you that it is now easier than ever to partake in tacit collusion.
Tacit Collusion: Circumstance where two companies agree upon a certain strategy without puttin it in writing or spelling out the strategy explicitly.
The article has a really good analogy about the competition and tacit collusion, “It’s not illegal. But it’s like having a few big people in a small boat. Anyone’s decisions tie you all together.” Tacit collusion is already happening the airline industry. It seems that as soon as one airline adopts a new fee for traveling, the other major airlines immediately follow suit. There really isn't any competitive advantage over one airline and the airlines know that. They are all cooperating with each other and sharing a piece of the pie rather than trying to destroy the competition. Waging war on each other would be too costly for the industry and they are in no position to wage war because they are finally starting to make a decent profit by working together.
South West is really the only major airline that is attempting to operate on cost leadership and product differentiation, as they are normally cheaper than the their competitors and do not offer baggage fees. South West does not serve international routes though.
Airline Consolidation: Tacit Collusion
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