"US airlines need to get smaller to get profitable" US Airways CEO

US Airways chief says airline industry needs to get smaller to get profitable, improve service http://bit.ly/KtQD6 .
This is something I agree totally with, the industry needs to get smaller in order to grow and definitely improve service to match those in Europe, the Far East and MENA.
The Majors have slowly moved towards LCC practices to improve their cash flow with ancillary charges such as baggage, Wi-Fi and others in addition to stopping beverage and food services on shorter sectors in order to keep their tickets as low and competitive as possible.
What I disagree with is the means the industry should become smaller. He advocates consolidation and mergers and acquisitions as means to improve efficiencies. Definitely, a good merger will improve efficiencies but not necessarily services and definitely will not make the industry smaller. Consolidation and Chapter 11 were used in the last decades as means to improve the industry but unfortunately without any success, the industry has failed to reinvent itself or transform its markets in spite of several opportunities such as 9/11, SARS, Avian Flu, 150 USD barrel of oil, the worst recession since the 1930s and now H1N1.
As the recession deepens and traffic figure take a nose dive, measures put in place last year during the oil price crisis are losing steam. The recession and the rising oil prices (70 USD a barrel) will start a new spiral of ailing and failing airlines. No Chapter 11 please, allow them to fail, this is the only means of removing capacity from the market. The effect of a failing Major Airline will not be as catastrophic as we all think.
Unemployment is the primary concern, however we are starting to hear about impending layoffs. The net effect on unemployment will be minimal as carriers pick up capacity in the affected hubs in order to capitalise on available traffic. The other issue would be aircraft availability and prices, as traffic nosedived, carriers as usual brought in their older, less efficient, less green but smaller aircraft in order to reduce capacity to match demand. The plans to retire these older aircraft get shelved every time traffic slows down. It is about time MD80s and older B737s get retired, and newer and more efficient greener aircraft come into service. That will bolster sagging aircraft lease rates and reduce carbon dioxide footprints and hopefully the Emission Trading System (ETS) charges that will be added to our tickets in the near future.
It has been said often, that we should not waste a good crisis, so far we have wasted every crisis, let us not waste this one to reinvent the industry.