From February 2, Jetstar will lift its 7kg carry-on weight limit in favour of a size-based carry-on baggage model adopted by several European low-cost carriers such as Ryan Air.
Passengers will be able to bring one small, under-the-seat bag up to 10kg, but anything larger than a backpack, handbag or laptop bag will incur a charge.
Passengers who want to larger carry-on stored in overhead lockers will be charged between $25 and $52 one-way, depending on the flight route, for "limited" priority carry-on.
Priority boarding will be provided for passengers who pay for the carry-on option.
The stripped-back fare may come as welcome news for light travellers who don't require overhead luggage, aviation expert Tony Stanton said.
"(Passengers) may eventually treat the overhead charge in the same way they currently treat charges for checked baggage, meals and seat selection," he told AAP.
But if the extra cost of adding on a priority carry-on pushes Jetstar prices closer to competitor fares, some customers may choose the other airlines, Mr Stanton cautioned.
"Whether it backfires will therefore depend on the size of the price difference after all the extras with Jetstar and on whether Jetstar communicates the change clearly," he said.
The changes follow "extensive research and feedback from customers and crew" which found frustrations with weighing bags and finding space in overhead lockers, Jetstar said.
The first charge of its kind by a major airline in the Australian and New Zealand market, Jetstar chief executive Stephanie Tully said the new model would streamline boarding, help more flights depart on time and keep fares low.
In June 2026, 75 per cent of domestic Jetstar departures were on time, compared with an industry average of 81.9 per cent, according to the Bureau of Infrastructure and Transport Research Economics.
But additional revenue is clearly part of the rationale for Jetstar, Mr Stanton believes.
"If faster boarding were the only objective, Jetstar could use boarding groups, stricter enforcement of bag dimensions or other forms of cabin-baggage management," he said.
When asked about the decision, the budget airline's founding chief executive Alan Joyce said Jetstar did a lot of things to keep airfares low."Anything Jetstar can do to keep those airfares low, I think, is good," the former Qantas boss told ABC TV.
Federal politicians weren't as "glass half full" as Mr Joyce, slamming the luggage levy.
"No reason for this (other) than extracting more money from passengers," Nationals Senator Bridget McKenzie wrote on social media.
Independent Senator David Pocock also took aim at the federal government for its "little action" to hold airlines to account.
The Albanese government expect airlines to be clear on their services as people buy tickets to avoid surprises at the airport, federal Transport Minister Catherine King said.
"Jetstar claim this change is to keep fares affordable, it will be up to them to demonstrate that to passengers," she said.
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