The number of people travelling on international flights hit a five-year low in June, the International Air Travel Association said.

World passenger numbers grew 3.8 per cent in the month - the lowest expansion since the 2003 Sars epidemic dampened demand for air travel, it said on Monday.

It warned the situation would get 'a lot worse' amid plunging confidence and high oil prices.

As part of its efforts to cope with high global oil prices, Malaysia Airlines (MAS) yesterday launched a flexible employment scheme designed to cut costs while retaining skilled employees.

Under the scheme, Malaysia-based employees can go on voluntary leave for up to a year to explore new business opportunities and still be assured of a job to return to, the airline said.

Employees can also opt to work part-time, with their schedule and salary cut accordingly, it said.

'This is a win-win situation at a time when airlines around the world are retrenching employees to cope with the skyrocketing fuel price,' Malaysia Airlines said.

'Although we want to reduce manpower in the short term to manage our cost..., our approach is different, as we will grow in the medium to long term. We want to keep our skilled employees,' said the state-owned airline, which has some 18,000 workers.

Record prices for jet fuel are also prompting airlines to squeeze extra revenue from customers.

On Monday, New York-based JetBlue Airways introduced a new charge for its passengers - US$7 (S$9.60) for a pillow and blanket set on flights of two hours or longer.

The charges are the latest in a string of fees that airlines have been tacking on to previously complimentary amenities, including food, beverages and check-in luggage, in an effort to cut costs.

US Airways has begun charging US$1 for previously free coffee and tea, and US$2 for sodas, juices and bottled water.

For months, major airlines like American Airlines, Delta Air Lines, and Northwest Airlines have been adding fees for extra baggage and introducing hefty fuel surcharges.

Travel experts say that the fees, when combined, can increase some passengers' total trip cost by hundreds of dollars, reported the Wall Street Journal yesterday.

Airlines say the moves have already produced hundreds of millions of dollars in 'ancillary revenue' and predict more such steps lie ahead.

JetBlue, for one, is on track to collect about US$60 million this year from customers purchasing extra legroom and paying an extra US$15 to check in a second bag, reported the Wall Street Journal.

Some airlines have also been talking about charging passengers according to their weight - although tongue-in-cheek.

Malaysia's long-haul budget carrier, AirAsia X, came under scrutiny after travel trade magazine Travel Today quoted one of its executives saying charging passengers by weight could be an option to combat rising fuel charges.

But the carrier yesterday issued a statement saying the comment had merely been a joke.

'We never planned or even considered charging passengers by weight,' chief executive Azran Osman-Rani said.

LOS ANGELES TIMES, AGENCE FRANCE-PRESSE, ASSOCIATED PRESS