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Cheap Fuel, New Fees Keep Airlines Upbeat

Bastian believes something on the extremely unlikely order of a 20% drop in revenue would have to occur to offset the anticipated decline in fuel costs. "We've never seen the level of demand destruction that some are forecasting," he said.

At United, fourth-quarter capacity will be down 11%. After reducing its current-quarter guidance, United now projects revenue per available seat mile growth of 2.5% to 4.5%. Looking ahead to 2009, the carrier predicts that various fees will produce $1.2 billion in new revenue and that by year-end, it will have shed 100 of the 460 aircraft in its mainline fleet.

For Alaska, advanced bookings are up 3 points in December, 3 points in January and 1 point in February, compared with the same period last year, said Brandon Pederson, vice president of finance. Loads at subsidiary Horizon are unchanged. Pederson noted that Alaska has reduced capacity by 8% and that guidance "will likely tick up a bit."

Meanwhile, US Airways CEO Doug Parker says, "November was very soft." AirTran's Fornaro says that was because the stock market was melting down, travel slowed during election week and the late Thanksgiving pushed traffic into December.

Both December and January look better than November, Parker said. For the industry, "most of us see improvements in RASM in the fourth quarter and most people are predicting RASM improvements in 2009," he said.
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