What does it mean to be the biggest airline in the world? Mergers keep producing some of the world's largest carriers but being among the biggest also makes you a target of ambitious competitors.

Air France-KLM, already Europe's largest, is looking to cut costs to become more profitable and take on other giants such as Lufthansa and IAG, parent of British Airways and Iberia. The airline is looking to shed staff, freeze hiring and return to profitability in order to better compete with rivals. There may be fewer available seats during the winter season and into next summer as the airline trims capacity, including seats available through its joint venture with Delta Air Lines. Air France-KLM is also de-focusing its cargo operations after disappointing financial results. The company cites the competitive disadvantage it has with Lufthansa due to the latter's ability to take in higher taxes and other charges; and with British Airways because of currency differences. Despite the staff and capacity reductions and financial challenges, Air France-KLM is considering the purchase of 100 new aircraft, likely to be split between Boeing and Airbus. Meanwhile, the other large carriers are not staying put.

British Airways and Iberia parent IAG is considering purchasing Irish carrier Aer Lingus after the Irish government has made moves to sell its stake in the airline. Discount carrier Ryanair has all but given up taking over Aer Lingus after several years of attempting to acquire the carrier and running into opposition over competition concerns. What's in it for IAG, already the largest European trans-Atlantic airline company? The golden nuggets in the potential takeover are the valuable take-off and landing slots that Aer Lingus has at Heathrow – already a fortress hub for British Airways and its Oneworld alliance partners.

For its part, Lufthansa is looking to trim costs by offloading BMI, which has suffered huge losses in the first half of 2011. Lufthansa acquired BMI just two years ago. BMI and its low-cost subsidiary BMI Baby also have valuable slots at London's Heathrow Airport and that is why it could be an acquisition target for British Airways and Iberia parent IAG.

Airline consolidation continues unabated despite soaring fuel costs and somewhat lethargic premium ticket sales. As some carriers look to shed unprofitable components of their businesses, other carriers are ready to scoop them up in order to shore up their strangleholds on key airports and routes. Regulators should keep a close watch at the dizzying array of mergers and acquisitions among airlines. While some transactions may overtly harm competition and are rightly scrutinized, the roundabout nature of some proposed deals may seem benign, but could still leave airline passengers with the same result – higher fares.