American Airlines is backing off one its stingiest cheap-seat restrictions: a ban on carry-on bags

American Airlines, the world's largest carrier, is loosening the rules for its most restrictive, basic economy tickets to allow passengers to bring carry-on bags.

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A woman putting her suitcase in an overhead luggage bin on an American Airlines plane at Miami International Airport.

By Leslie Josephs, CNBC

• American Airlines' ban on basic-economy carry-on bags lifts Sept. 5.
• The airline flight search sites like Google help passengers filter out flights by baggage allowances.
• That meant American flights with baggage allowances showed up farther down on the list.

American Airlines is backing off of one of its stingiest rules for its cheapest seats: requiring passengers traveling basic economy to check their carry-on bags, and pay the $25 to $50 fees that come with it.

Travelers flying on basic economy tickets had been banned from bringing carry-on bags, filled with clothing or other necessities, on board when the restrictive, no-frills fares launched in early 2017. The new rule takes effect Sept. 5.

[post_ads]American is trying to get a leg up on its competition as the industry gets squeezed by higher jet fuel costs and reduced profits. Its shares have dropped more than 24 percent so far this year, more than other U.S. airlines.

United Airlines has a basic economy product that's similar to American's. It doesn't allow basic economy passengers on domestic flights to bring carry-on bags. United did not immediately respond to a request for comment on whether it would follow suit.

American and other airlines' so-called basic economy class is restrictive by design, so travelers will avoid the fare altogether and purchase a more expensive ticket, American Airlines executives have said. Travelers on these fares board last, cannot be upgraded, are not allowed to select a seat ahead of time, and can only bring a personal item they are allowed to bring on board must fit under the seat in front of them.

Online flight search and booking sites, like Google, help travelers filter out fares and flights by baggage allowances, which pushed American main cabin economy fares down the list because they are more expensive than basic economy, the airline's CEO Doug Parker said Thursday.

Rival Delta Air Lines offers a version of basic economy that allows passengers to bring a carry-on bag with them.