Qantas Airways has announced it will shut down its Singapore-based budget airline Jetstar Asia by the end of July, citing unsustainable operating costs and intense regional competition.
In a statement released Tuesday, the Australian airline said the decision would free up A$500 million (US$325.9 million; £241.4 million) to be redirected into fleet renewal and expansion of its domestic and trans-Tasman operations. Thirteen aircraft from Jetstar Asia will be redeployed across Australia and New Zealand, reports BBC.
Jetstar Asia has struggled amid a surge in supplier prices—some rising by as much as 200 percent—as well as high airport fees and growing competition from regional budget carriers. “We have seen some of Jetstar Asia’s supplier costs increase by up to 200 per cent, which has materially changed its cost base,” said Vanessa Hudson, Qantas Group Chief Executive.
The low-cost airline, which has served the region for over 20 years, is expected to post a A$35 million loss for the current financial year. Qantas clarified that the closure will not affect its other Jetstar-branded carriers, including Jetstar Airways in Australia and Jetstar Japan, which will continue operations as usual. Jetstar Asia’s shutdown marks a significant shift in Qantas’ regional strategy, as it pivots focus toward strengthening its presence in its core Australian and New Zealand markets.