JetBlue executives declined to give a price for the bag fee, but they said pricing would fluctuate with demand. They said fewer than half of JetBlue passengers check a bag.

Other big airlines have added fees on checked bags since 2008, and JetBlue's move will leave Southwest as the only large US airline that allows all passengers to check at least one bag for free.

Southwest has said the lack of bag fees attracts enough additional passengers to more than offset money that would be raised by fees.

JetBlue will also add 15 seats to its Airbus A320 planes, increasing capacity to 165 from 150, and reduce average legroom to 33 inches between rows from more than 34 inches.

The retrofit of cabins will start in late 2016, take two years and still leave more legroom than in the main cabins of bigger airlines, JetBlue executives said.

JetBlue expects that the new fare classes and bag fees will generate more than USD 200 million a year in operating income, and the extra seats will raise another USD 100 million a year.

JetBlue announced the changes as it met in New York with investors, who have been pressing the company to boost revenue and profit margins.

In afternoon trading, shares of the New York-based airline were up 55 cents, or 4.3 per cent, to USD 13.27. They hit a 52-week high of USD 13.48 earlier in the session.

JetBlue also announced that it would delay 18 Airbus jets that were scheduled for delivery from 2016 to 2018 until 2022 and 2023 to cut capital spending by more than USD 900 million through 2017.

S&P Capital IQ analyst Jim Corridore praised incoming CEO Robin Hayes today, saying that he was focusing on boosting revenue and being careful on spending. Hayes, currently the president, will replace JetBlue CEO Dave Barger in February.

US airline industry is reaping huge profits due to full planes and modest increases in fares. Airlines have kept planes full and avoided profit-slashing fare wars by limiting their expansion plans.

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