United-US Airways merger would benefit sector, analyst says

And as travelers might sense, that elimination of redundancy would increase airfares, at least initially -- an unpleasant circumstance for travelers, but a positive, and needed, development for airlines, Bauer said.

"The unvarnished truth of the matter is that airfares [in the U.S.] have been under-priced due to a surplus of carriers. Fares have to go up to get airline margins where they should be," Bauer said. "Fuel costs will also add to fares, but long-term a better air travel system for the public will emerge." Bauer added that he does not have a rating on nor own shares in any airline.

Customer service impact

Some say a United-US Airways merger, immediately after the Delta-Northwest merger, would further hurt customer service by eliminating competition. That's a slightly simplistic assessment, says Bauer.

"The less competition, worse service logic applies in selected business cases, but not all," Bauer said. "With the airlines, you have to think slightly down the runway. Right now a considerable portion of an airline's resources is wasted in redundant, duplicate operations. The merger would allow the combined company to allocate resources more effectively to improve service." However, Bauer admitted that as part of the process certain flights would be phased-out, with large cutbacks possible at certain hubs.

However, amid the domestic airfare pain, Bauer said their will be pleasant surprises. The carriers may lower fares for international routes to attract customers, as they position themselves for the expected, large increase in international travel in the decade ahead.