There is no requirement for federal bailouts. Large airlines have at times been allowed to go bankrupt, and that's fine.

They've also been allowed to consolidate to the point that they are too big to fail.

Bankruptcy doesn't mean failure for large airlines. The shareholders get wiped out and bondholders take a haircut but the airplanes keep flying during the bankruptcy resolution so it's fine.

Why would an airline be too big to fail? They don't have counterparty risk like banks.

The airline would go bankrupt, the shareholders would lose their investment, the bondholders would own the new corp, and perhaps the aircraft fleet would get a new livery.

Political factors - even in these times, the obvious impact on pricing that the failure of Delta, American or United would bring isn’t tenable.

> an industry that periodically starts a fare war that requires federal bailouts

American airline tickets contain a 7.5% excise tax, $5.60 per-trip September 11th fee and another excise tax of $4 per flight segment. (That's in addition to the usual sales, payroll and corporate taxes.) Taking just the former, I'm curious what the net give/take ratio is. Because it might be argued that we run our airlines as an indirect tax on high earners to fund the jobs program that is the TSA.