It will also create "ancillary revenues" for Southwest, like the $10 Early Bird Check-In fee that the airline began offering on its Web site this fall.
"We are raising fares," Kelly said. "We're just trying to do that in a positive way."
The company also plans to relaunch its RapidRewards frequent-flier program in late 2010, a move Kelly said could generate additional revenue for Southwest while giving loyal customers more reward opportunities.
Southwest "is benefiting from both leisure and business consumers seeking the best travel value proposition which [Southwest] clearly offers with its bags fly free plan," Derchin wrote in a research note to investors last week.
Most airline executives are cautiously optimistic that 2010 will be a better year for the industry.
"The good news is that there are signs of recovery on the horizon," said United Airlines Chief Financial Officer Kathryn Mikells, adding that the Chicago-based carrier has seen an increase in corporate revenue and bookings since May.
Atlanta-based Delta will finish repainting all of merger partner Northwest Airlines' planes by April and expects revenue to become positive by midyear.
"I anticipate demand to remain strong," Delta Chief Financial Officer Hank Halter said. "There is not a lacking of demand in terms of willingness to travel."
Higher fares for peak travel days are also helping the industry, US Airways President Scott Kirby said.
Kirby said that November was the first month corporate travel was up compared with the same period last year and that US Airways' business traffic markets such as the Boston-Washington shuttle have recovered the fastest.
"I think this is very indicative of a corporate demand recovery," Kirby said at the Next Generation Equity Research Airline Conference.
While industry analysts expect airlines' financials to improve in 2010, it's only because 2009 was so terrible.
"I don't think they'll lose the massive amounts of money they did this year," Jenkins said. "There will still be fewer flights and the flights will be full of people."
This report includes material from The Associated Press.
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