JetBlue, Southwest Turn Up Promotional Heat

In an effort to spur a recovery in air travel, JetBlue and Southwest Airlines are in the midst of aggressive promotions. JetBlue launched a "2-day Sample Sale" that ends tonight with fares as low as $29 one way. Included in the fare is one free checked bag. American Airlines is countering with its own US destinations fare sale good through March 25.

Southwest, meanwhile, is running a "Bags Fly Free" campaign that takes direct aim at airlines that charge extra for bags (and virtually every airline does just that). Southwest's latest television commercial shows a line of baggage handlers who run onto the tarmac and lift their shirts to reveal letters that read "BAGS FLY FREE" to a shocked passenger looking out the window from a competitor's aircraft.

Airlines have been discounting fares and offering more miles to frequent travelers for flights during an industry-wide reduction in both business and leisure travel. But finally, some airline industry experts see a turnaround in sight. The International Air Transport Association (IATA) just cut its forecast for 2010 in half to a loss of $2.8 billion. It's still huge, but not as big as the $9.4 billion loss projected for 2009. It's a sobering thought that a loss of nearly $3 billion in an industry is regarded as good news.