Airlines cut costs as fuel rises

Carriers are struggling with higher fuel prices

Airlines globally are increasing baggage fees and fares in a bid to counter high fuel bills.

Australian airline Virgin Blue is to raise ticket prices by $5 Australian dollars ($4.70; £2.40) on average, and plans to cut costs by $50m this year.

Meanwhile United Airlines and US Airways have both announced a new $15 fee for the first bag checked in.

Oil prices have hit record highs recently, prompting carriers to pass on the rise in costs to customers.

'New playbook'

On Thursday, Finnair said it would cut 500 jobs due to higher fuel costs and a fall in demand.

As consumers face higher food and energy bills, the sale of non-essential items, such as flights, have fallen.

Earlier in June, US carrier United Airlines said it would cut between 900 and 1,100 jobs, to counter rising prices, in addition to 500 previously announced lay-offs.

And a number of US airlines have increased fuel surcharges by $20 per roundtrip.

"The major airlines are truly a la carte now - you don't get anything free anymore," said Tom Parsons, chief executive of travel website Bestfares.com.

"You get a tin can in the air, and anything else you pay as you go," he added.

Following the decision to raise luggage prices, US Airways chief executive Doug Parker said: "We must write a new playbook for running a profitable airline in this new and challenging environment."