The fight over flights will go on. And both YYC and YEG will not achieve the global reach they could if there was a single airport physically located between the 2 cities. This would also be a great opportunity for high speed rail to garner traffic from Edmonton and Calgary to the airport and to build Red Deer into a major city. Tourist traffic could head West through the foothills past Rocky Mountain House into the Rockies and allowing much needed tourist development along highway 11 into Saskatchewan River Crossing to Jasper and Banff. 2 billion for a single new airport ought to do the trick.
I fully understand your point, and there is likely some (limited) benefit of critical mass in terms of attracting new flights. However, it's not going to happen for a number of reasons.
First, airports in Canada are publicly owned (Transport Canada) and operated by non-profit airport authorities. It would be EXTREMELY difficult to convince the taxpaying public that two large, publicly-owned, recently renovated and expanded airports in YEG and YYC should be closed to passenger service and replaced with a single facility at Red Deer. Any politician proposing this would be crucified. Even if a Red Deer facility were built, photos and video of massive, empty terminals in Edmonton and Calgary would pop up regularly in the media and political campaign ads as examples of waste of public money. Dictatorships in the Middle East can forcibly shut airports and build white elephants without political consequences. Democratic societies can't.
Second, there would be massive opposition in both Edmonton and Calgary. Calgarians in particular (politicians, residents, business leaders) would complain to high hell that passenger service was being ended at a convenient airport right inside their city limits, in order to build some "pie-in-the-sky" airport "in the middle of nowhere." And yes, those are the phrases that would be used.
Third, theory and practice are two different things. Remember we were told in the 1990s that ending passenger service at the Muni and consolidating flights at the International would lead to a golden age of new service. Whatever happened with that? We don't even have nonstop service to Chicago, for crying out loud. And remember even further back to when the International was originally built. Why is it so far outside of the city, even today as Edmonton has expanded south? One of the original proposed sites for the International was what's now South Edmonton Common. But the airport was instead built so far south in order to be equidistant from Red Deer as is the Calgary airport, with the idea that if the distance were the same, YEG could attract a lot of those passengers. That never happened, Central Albertans still prefer to fly out of YYC and Calgary still has better air service.
Fourth, unlike Kevin Costner, Albertans have no guarantee that if such a facility is built, anyone would actually come. Who would we be trying to attract anyway? Air France? Lufthansa? Emirates? ANA? And at what point would even theoretical expanded service to a Red Deer superairport start to impact a facility like YVR and threaten its business? Air Canada's Pacific hub, for example, depends on connecting traffic from other parts of Canada and the U.S. It is highly unlikely AC or the YVR authoriries would want to see a rival hub developed in Alberta. And the feds tend to defer to AC when dealing with traffic rights. It was a years-long fight to get Turkish Airlines service to YVR because AC and Ottawa thought it might steal traffic from AC's routes to the Subcontinent. And Emirates and Etihad still have only minimal traffic rights in Canada because of fears that AC's nonstops out of YYZ and YVR would be harmed.
Fifth, imagine the images and news stories about the families and farmers whose land is being expropriated to build the new superairport. ("Bob Cobb and his family have been farming this land outside Innisfail for ten generations. That's all over now...") Think of the PR black eye for Alberta in replacing farmland with a facility related to the burning of fossil fuels. Extinction Rebellion and like groups have laid down on runways and in front of bulldozers in order to prevent expansion at airports like Heathrow. You can imagine what environmentalists and protest groups would do in this case. It would be an extravaganza like we've never seen.
Red Deer can rest easy. A combined airport ain't never going to happen.