Then, UA with greater capacity can start raising prices and getting the higher end of the market.
-1.
Greater capacity will mean dirt cheap EWR transcons on UA and VX if VX sticks this out. UA will be happy to forgo higher revenue so long as VX backs off.
When AA got serious about taking on B6 transcons back in '03 they dumped huge amounts of CA/FL capacity and added tons of flights to LGB as well.
Prices fell well below $200 and AA did the famous AVNYC and AVBOS for 1 free flight systemwide if you flew twice between BOS/NYC and CA/FL.
With an AVNYC ticket I flew from GRU-DFW-JFK (stopover)-NRT (dest)-LAX (stopover)-MIA-GRU.
B6 had huge losses but they stuck it out and won the battle.
Doesn't always work that way. But CO was particularly good at guarding their fortress hubs (CLE/EWR/IAH) and was rewarded for that in the long term with huge market shares and high fares.