Qantas sheds Jetstar Asia to protect lead in core domestic Australian market
Qantas said its domestic profit margin was 17 per cent at its half-yearly results in February. PHOTO: ST FILE
SYDNEY – National carrier Qantas promotes itself with the proudly patriotic slogan 'Spirit of Australia' – and its decision to close its Singapore-based subsidiary Jetstar Asia was widely seen as a shrewd move to return to the comfort of its highly profitable domestic market.
Analysts saw the move as a bid to shift aircraft and capital from the competitive low-cost market in South-east Asia to the Australian market, where Qantas' only serious competitor is Virgin Australia.
The Australian domestic market is particularly lucrative now that other rivals such as Rex and Bonza have struggled or collapsed, noted Professor Rico Merkert, an international transport expert from the University of Sydney.
'The Australian market is very profitable. Qantas was probably thinking about how it can benefit more from the high demand and quite nice yields at the moment.'
Meanwhile, Qantas has reaped growing domestic profits as the airline and Virgin were both more 'disciplined' and abandoned their all-out war over capacity and prices, he told The Straits Times.
'Closing Jetstar Asia is a sensible decision that will help Jetstar to become more profitable,' he said. Jetstar is Qantas's low-cost domestic subsidiary.
Qantas said its domestic profit margin was 17 per cent at its half-yearly results in February, compared with 8 per cent for international and freight.
Its move is seen as an attempt to refocus on Australia, as Virgin Australia relists as a public company on June 24, five years after it was taken over by Bain Capital.
Mr Ian Thomas, an aviation expert from Sydney-based CAPA Consulting, told ST that Qantas was 'tying off loose ends' as it faced potential increased competition from Virgin.
'Within Australia, Virgin's refloating has put some pressure on Qantas internally,' he said.
Virgin Australia had a domestic market share of 35 per cent as at December 2024, compared with Qantas' 63.6 per cent (including Jetstar), according to a Feb 18 report by the Australian Competition and Consumer Commission.
'Qantas has never really invested the amount of money it needed to establish (Jetstar Asia) on a viable basis. It really didn't have the fleet size,' Mr Thomas added.
He said Qantas had been reluctant to properly invest in the competitive low-cost Asian market, which left (Jetstar Asia) struggling against bigger players such as Scoot, the low-cost arm of Singapore Airlines, which maintains a fleet of about 50 jets including high-capacity long-haul Boeing Dreamliners.
In contrast, Jetstar Asia operates 13 medium-capacity single-aisle Airbus jets.
Nine of these A320 jets are slated for Jetstar's for use in Australia and New Zealand, while four will be used on routes servicing mining workers in Western Australia.
'Qantas has fantastic demand domestically but not enough aircraft,' Professor Merkert noted. 'It is not easy to get new aircraft at the moment. The easiest way to do it is for Qantas to redeploy assets that it already has in the fleet.'
Qantas said on June 11 the decision to shut down Jetstar Asia after July 31 stems from escalating supplier costs, airport fees and aviation charges in recent years amid intensifying competition and growing capacity, particularly after the Covid-19 pandemic.
Jetstar chief executive Stephanie Tully told reporters on June 11 that Jetstar Asia has only been profitable for six years in its two decades operating out of Singapore since 2004.
The intra-Asia carrier was expecting to post an underlying loss of A$35 million (S$29.3 million) before interest and tax in the financial year ending June 30.
'Qantas has much bigger (profit) margins in Australia. It would have been more appropriate to use that capital in the Australian domestic market, which it is now proposing to do,' Professor Greg Bamber, an aviation specialist from Monash University, told ST.
'It was probably a mistake for Qantas to have invested in Jetstar Asia in the first place.'
He said abandoning the carrier would enable Qantas to focus on reaping profits from routes serving the 'golden triangle' – the east-coast cities of Sydney, Melbourne and Brisbane where Australia's vast population is centred. These three cities offer massive demand for travel, but with no high-speed rail to connect them.
The move by Qantas also signals a change of direction under group chief executive Vanessa Hudson, who was formerly chief financial officer. She took over in 2023, ending the 15-year reign of Alan Joyce.
Mr Joyce was the head of Jetstar when it announced plans to launch Jetstar Asia in 2004.
Jetstar Asia marked the first of Qantas's ventures aimed at low-cost travellers in Asia. The airline later launched Jetstar Pacific, operating in Vietnam, but later ended its involvement in the venture. It also launched Jetstar Japan, which some analysts viewed as a more successful model than Jetstar Asia because it involves a partnership with a local carrier, Japan Airlines.
Despite the closure of Jetstar Asia, Jetstar will continue to fly from Australia into Asia, including to Singapore, Thailand, Indonesia, Vietnam, Japan and South Korea. It is also looking to return flying to the Philippines after ending its connection there about a decade ago.
Ms Hudson, unlike Mr Joyce, never headed Jetstar – and is clearly willing to shed non-performing legacy aspects of her predecessor's era.
'Alan Joyce cut his teeth in Jetstar and had an affinity with its operations,' Mr Thomas said.
'Vanessa Hudson, being the new broom, is going through their strengths and weaknesses. She is reviewing everything and has decided to draw a red pen through Jetstar Asia.'
Jonathan Pearlman writes about Australia and the Pacific for The Straits Times. Based in Sydney, he explains matters on Australia and the Pacific to readers outside the Oceania region.
Join ST's WhatsApp Channel and get the latest news and must-reads.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Independent Singapore
3 hours ago
- Independent Singapore
Where NUS and NTU outshine Oxbridge in global rankings
One in three students at the National University of Singapore (NUS) and Nanyang Technological University (NTU) is a foreigner. The attraction is clear: NUS ranks fourth globally—behind only the Massachusetts Institute of Technology (MIT), Stanford, and Carnegie Mellon—in computer science and information systems in the 2025 QS World University Rankings By Subject. In electrical and electronic engineering, both NUS and NTU share the fourth spot with Harvard, trailing just MIT, Stanford, and the University of California, Berkeley, according to the same source. Either or both of the universities excel in other fields as well, including law, medicine, and architecture. With their strong showing in the 2026 QS World University Rankings, could NUS and NTU be seen as the Oxford and Cambridge of Asia? Sticklers may disagree, and not without reason. For one, NUS and NTU are located far closer together than the dreaming spires of Oxford are to Cambridge. More importantly, they cannot yet rival the rich Oxbridge tradition in the arts and humanities. Still, in many other fields, they are catching up—or have already overtaken—and that progress is clearly reflected in the rankings. NUS and NTU are ranked eighth and 12th respectively, just behind Oxford and Cambridge, which come in at fourth and sixth. The strong performance of Singapore's universities is no longer a novelty. This marks the third consecutive year NUS has held eighth place. NTU, which ranked 15th in 2025, has returned to 12th, a position it surpassed in 2018 and 2020 when it ranked 11th. Splitting the two Singapore institutions in this year's rankings is the University of Hong Kong at 11th. See also Singapore experts weigh in on the Covid-19 situation NUS is the only Asian university in the global top 10. The only other non-Anglo-American presence is ETH Zurich of Switzerland, in seventh. The broader Asia-Pacific region has a growing presence in the top 20: China's Peking University and Tsinghua University are ranked 14th and 17th, while Australia's University of Melbourne and the University of New South Wales are 19th and 20th. NUS, NTU: Areas of excellence The Singapore universities are no longer known solely for their engineering prowess. NUS ranks 10th globally in law—making it the only non-Anglo-American university in the top 10 for legal studies. NTU stands at 82nd. In medicine, NUS ranks 18th—the highest for any Asian university—while NTU is 84th. NTU, however, shines in communication and media studies, coming in fourth behind the University of Amsterdam, Harvard, and the University of Texas at Austin. NUS ranks 14th in this field. While Oxford and Cambridge still reign supreme in the arts and humanities, NUS is gaining ground. It ranks second globally in art history, eighth in linguistics, ninth in architecture, 15th in English language and literature, and 17th in history. See also SATIRE: Pokemon GO releases sad news for its Singapore fans This academic success is underpinned by scale and diversity. With over 33,000 students, NUS has the second-largest student body among the top 10 universities—trailing only University College London, which has over 45,000 students. NTU has more than 25,000 students. International students and staff International students and staff contribute significantly to the success of both institutions. Foreigners make up 36% of the student body at NUS and 33% at NTU. The faculty is even more international, with 65% of staff at both universities coming from overseas. In comparison, Harvard has around 24,300 students, including 6,700 international students, and over 4,400 faculty and staff, only 27% of whom are international. Oxford has over 22,000 students, more than 9,000 of them from abroad, and 6,500 faculty and staff, with 44% from overseas. The international students and staff carry weight in the QS World University Rankings. QS applies the following weightage when ranking universities: Academic reputation: 30% Citations per faculty: 20% Employer reputation: 15% Employment outcomes: 5% Faculty-student ratio: 10% International faculty ratio: 5% International research network: 5% International student ratio: 5% International student diversity: 0% See also SP overcharges bill, claims they 'overestimated' $1500 There's an old story about Benjamin Jowett, the 19th-century Master of Balliol College, Oxford, who once declared, 'I am the Master of this College; what I don't know isn't knowledge.' Today, such a claim would be inconceivable. From NUS to NTU, Oxford to Harvard, the global groves of academe are constantly striving for the next breakthrough, the next frontier of knowledge. Top 20 in QS World University Rankings 2026: Massachusetts Institute of Technology (MIT) Imperial College London Stanford University University of Oxford Harvard University University of Cambridge ETH Zurich National University of Singapore University College London California Institute of Technology (Caltech) University of Hong Kong Nanyang Technological University University of Chicago Peking University University of Pennsylvania Cornell University Tsinghua University University of California, Berkeley University of Melbourne University of New South Wales
Independent Singapore
3 hours ago
- Independent Singapore
‘More vouchers?' Singaporeans on what they expect from PM Wong's National Day Rally speech
SINGAPORE: After it was announced on Wednesday (Jun 18) that Prime Minister (PM) Lawrence Wong will be delivering the National Day Rally speech on Aug 17, commenters online expressed what they were looking forward to or expected from it. The PM's Office said that the speech will be held at the Institute of Technical Education (ITE) College Central in Ang Mo Kio. This is the second time Mr Wong will be giving the speech, and the first since Singapore handed the People's Action Party (PAP) a very strong mandate in last month's General Election. The speech is widely recognised to be the most significant political one of the year, since important policy announcements are made. In last year's speech, PM Wong made announcements concerning SkillsFuture, public housing, and other social support measures. This year, based on comments online, a number of Singaporeans appear to expect more announcements about vouchers. One Facebook user, perhaps mostly in jest, wrote that they expected the speech to be '50% about vouchers.' See also Employees in retrenching companies experiencing lower morale A Reddit user decided to play it twee, writing 'Papa Wong, I want more vouchers.' Others, however, decided to take things more seriously, and more than a few netizens across various social media platforms expressed hope for a rollback on the Goods and Services Tax (GST) hike. For one, however, public housing was high on their wish list. 'I just want affordable housing for young and future Singaporeans. Million-dollar public housing while the youth struggle with one of the worst job markets in history,' they wrote. 'Housing, housing, housing. The snowball keeps growing bigger,' another agreed. A commenter on Reddit was also concerned about jobs, writing, 'Please do something to prevent companies /jobs from leaving. Once they leave, they can only return back to our shores in next five to 10 years given the investments and commitment of their contracts in the countries they relocate to, so what will happen to us during these years, eat grass?' For one Facebook user, meanwhile, wi-fi costs are a big concern. 'Your speech should include reducing internet, WiFi Data cost for the people. Currently, it is just too high. Many competitors in the market, but all are game to con and swindle the people money. First month price is good. Second month, they just increase it like crazy… We want you to address these issues if we are to move forward Sir.' /TISG Read also: IN FULL: Lawrence Wong stresses strategies to navigate new world in maiden National Day message as PM
CNA
4 hours ago
- CNA
More ad-hoc sellers popping up online ahead of durian harvest
With the upcoming durian harvest, more enterprising ad-hoc sellers are popping up online. Veteran durian businesses say they have witnessed more online sellers looking to make a quick buck. But they say it is a gamble that may not pay off. This is because poor weather conditions have lead to a smaller supply and pushed up prices to a record high. Alexandra Anand with this story.
