Shouldn't they just buy Monarch?
The only barrier to this is a highly strung owner/manager. Once PM retires (he can't go on for ever) and big City institutions take majority ownership of Dart Group, some form of merger or acquisition is surely inevitable?
Both businesses are low cost airlines with holiday companies attached. Both shortly to have B737 fleets. Their UK bases are largely complimentary. Monarch are currently owned by someone whose strategy of profit extraction is to turn it round and sell it on. The trend in aviation is away from small niches towards larger companies.
The only question is what would the merged company be called, i.e. whose brand is stronger?