Joe:
The industry has not gone crazy with capacity as they have in years past. The NWA/DAL merger was not going to reduce capacity much. Most of the deal revolved around the ability to put Delta's good domestic and European/African/Middle East system with NorthWest's fleet, Asian system and pilots.
Open skies is another version of deregulation, on a Global scale. DAL/NWA was not your typical airline meger in as much as this was about getting in position for growth with the belief that we can connect the World (at least our part) better than BAL/AAL, Singapore, the Virgins, or Emirates.
Sure AirTran is running out of places to put 737's, but this expansion has limits which are more constrained by the cost of fuel. There is no such thing as a low cost carrier now, it is all high cost.
If Delta could get 50 777's and 1,500 pilots to fly them today, they probably would. I expect NWA is thinking the same thing with their 787's. A partnership between the two would provide the monetary resources to acquire the needed fleet and the people to get the job done.
Delta's international operations now bring in more cash in foriegn currencies than they do Dollars. Pricing power, sure, but when your costs are in Dollars and your revenues in Euros you enjoy a cost advantage as well.