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What can be inferred about the state of American airlines which are not discount airlines?
Once these airlines cover their previous losses, they will be profitable again (as long as fuel prices stay down).
According to the passage, other American airlines lost money not because of the competition but because of high fuel prices. Now that fuel prices are down, they will be able to make profits.
While this answer choice may be appealing, there is no information in the passage to suggest the course of action that other American airlines might pursue to deal with the competition.
The passage states even as the price of fuel declined, ticket prices remained high... The word even in this sentence implies that the author is quoting an exception to the rule: fuel prices usually affect ticket prices.
While this might be a logical course of action, and the last paragraph does indeed discuss the benefits of maintaining a high level of service in the long run, the passage does not advocate any particular measure for other American airlines to compete against American discount airlines. Thus, the conclusion in this answer choice goes beyond the scope of the passage and cannot be inferred from it.