To offset soaring fuel costs, American Airlines has announced it will start charging passengers for all checked baggage.

For tickets purchased on and after June 15, American will charge customers $15 to check a first bag, while a second checked bag will cost $25. American Airlines frequent-flier members with elite status (Executive Platinum, Platinum, and Gold) and customers who purchase premium tickets will not have to pay the extra fees, which will apply only to flights within the United States and Canada.

"While we understand that these fees affect customers, we also believe that our pricing for the services we provide remains extremely competitive in the industry and continues to offer our customers ample choice and value," said American Airlines CEO Gerard Arpey, in a statement. "The bottom line is that our revenues, which include ticket sales and fees, must keep pace with our increasing costs."

And in a response to rising fuel prices and a weakening economy, American also announced it is cutting domestic capacity by 11 percent to 12 percent during the fourth quarter of 2008, compared to the fourth quarter of 2007, and will retire at least 75 regional and mainline aircraft.

"The airline industry as it is constituted today was not built to withstand oil prices at $125 a barrel, and certainly not when record fuel expenses are coupled with a weak U.S. economy," Arpey said in his statement. "Our company and industry simply cannot afford to sit by hoping for industry and market conditions to improve."

At press time, no airline had matched American’s move, but in the last couple months all the major carriers have begun charging passengers $25 ($20 for Jet Blue) to check a second piece of luggage.