Domestic deregulation occurred in 1978 and was followed by the rapid growth of hub and spoke systems. The battle for control of hub airports contributed to large losses, mergers, and several major bankruptcies. As a result of this, in 1986 and 1987, about a dozen airlines merged. Texas Air merged with Eastern and Peoples Express, Northwest Airlines with Republic Airlines, Delta with Western and USAir with Piedmont. No major carrier has been involved in a merger or acquisition since 1993, when Southwest Airlines bought Morris Air.
Mergers are now a thing of the past.
Instead the future is strategic alliances and code sharing. This change was illustrated in early 1998 when Continental snubbed Delta Airlines merger offer for a partnership with Northwest Airlines. Mergers are shunned because they often lead to complications in trying to combine different corporate cultures. Even when small airlines merge, they ve had problems building the critical mass needed to compete with the major airlines. Western Pacific s and Frontier Airline s proposed merger was aborted in October 1997, with Western Pacific sliding into Chapter 11.