I think part of the problem is that Delta has all of those planes, employees, and slots. I don't know that reducing the number of daily flight from ATL to IAD will result in better coverage of fixed costs. It isn't a matter of losing $100/ticket but making it up on volume. Businesses must do their best, in the short run, of covering their fixed costs.
I agree that there are huge changes coming in the industry, and I have no idea where we'll end up.
Lots of regionals, 2-3 Nationals, 6-7 Internationals. Thats it.
"Delta is apparently not competitive on that route."
That explains Delta's 100% load factor from DC to ATL last weekend. Obviously if Delta is overbooking its airplanes at $138, a basic college sophomore microeconmics class suggests the price is too low.
The mistaken assumption you are making is that AirTran and US Airways are charging a microeconmically sound price, and that AirTran and US Airways are covering their costs. My personal guess is AirTran is loosing its shirt, and instead of using low prices to fill its seats for a given day (an airline has a limited product, and once it has sold its seats, it cannot sell more), instead AirTran is keeping prices low to cause financial damage to its competitors (i.e., "dumping"). In a duopoly market like Atlanta, this should be considered anticompetitive. It is just hard for the government to consider a "small" AirTran (market cap $960M) taking anticompetitive action against a "large" Delta (market cap $148M), or a "small" JetBlue (market cap $2B) against a "large" United (market cap $70M).
I remember when people complained about dumping when it was cheap Japanese cars and the damage caused was to American car companies.
But today, the same penny-wise, pound-foolish Americans love unrealistically low airline fares will be complaining when the Deltas, Uniteds, Northwests, and Americans pull out of their mid-sized cites. Service to mid-sized cities will be the first casualties of legacy carrier bankruptcy restructuring. The complaints will be loud when the lack of airline service means driving three hours to a major airport, but will get even lounder, when lack of air service results in corporations deciding against putting new plants in their towns.
The chickens will come home to roost. And the politicians who subsidized so-called low-cost carriers into their mid-sized cities will react with surprise when the low-cost carriers pull out of their cities shortly after the legacy carriers depart. Then they will start demanding the federal government subsidize air carriers to fly into their cities.