There would a significant reshuffling of routes, but what would blossom would be many smaller regionals and "point to point" airlines, at significantly lower cost. It is much the same as the break up of Ma Bell, into the AT&T and the Baby Bells... the same catastrophic arguments were put forward.. thousands will lose their jobs, etc etc.. in fact, it stimulated the industry and made it stronger and better.
The US airline industry is collectively losing billions. They routinely file bankruptcy, screw their employees and customers and treat competition laws with contempt. So the current system is not exactly working well... how bad could the alternative be?
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