At last, we may see the long overdue shakeout in the US airline industry, where chronic overcapacity has been sustained by the ability of carriers to keep operating under Chapter 11 court protection from their creditors. Delta, the country's third largest airline, has this week launched a price war. The extent and effect of this will depend on how far other airlines match its fare cuts - so far the matching reductions have largely been just on routes where Delta operates - and on the course of oil prices in the months to come. But it is quite possible the price war may doom the chances of recovery for United and US Airways, respectively the country's second and seventh largest airlines, which are currently in Chapter 11.

Delta has said it will reduce domestic fares by up to 50 per cent and scrap requirements for overnight stays on Saturdays, a tactic to prevent business travellers from using discount tickets. In the short term this will lose it revenue it can ill afford to forego. But Delta appears to be gambling that if it moves first, it may be one of the survivors in what looks like a final dogfight among the so-called legacy airlines. The latter have, in the US as in Europe, been steadily losing ground to low-cost carriers unburdened by the strong unions, pension and healthcare liabilities that established carriers have had to carry.