Delta Air Lines and Northwest Airlines, two US airlines seeking to add scale in the face of a brutal industry-wide downturn, have revived their talks to merge, people familiar with the matter said.

Record fuel costs, competition and ebbing demand has ended the US industry’s modest recovery, forcing carriers to slash flight schedules, park aircraft and impose fees on passengers. In the past week, three low-cost airlines – Aloha Airgroup, ATA Airlines and SkyBus – shut down operations.