Qantas shutters Singapore-based Jetstar Asia on rising costs, competition
June 11 (Reuters) - Australia's Qantas Airways QAN.AX will close its Singapore-based budget airline Jetstar Asia, the group said on Wednesday, blaming rising supplier costs, high airport fees and strong regional competition.
The shutdown of the 20-year-old airline next month will result in up to 500 job losses, a Qantas spokesperson said, and Jetstar Asia's fleet of 13 Airbus AIR.PA A320 planes will be redeployed to Australia and New Zealand.
Airlines across Asia, including budget rivals like Singapore Airlines' SIAL.SI Scoot, Malaysia-headquartered AirAsia CAPI.KL and Vietnam's VietJet Aviation VJC.HM, have restored and grown their capacity post-pandemic, driving competition between carriers up and airfares down.
Jetstar Asia, which operated 16 intra-Asia routes from Singapore's Changi Airport, has faced growing challenges in recent years and has been unable to deliver returns comparable to stronger-performing core markets within the Qantas group, the company said.
"We have seen some of Jetstar Asia's supplier costs increase by up to 200%, which has materially changed its cost base," Qantas Group CEO Vanessa Hudson said in a statement that did not provide further details.
Jetstar Asia is currently expected to post an underlying loss of A$35 million ($22.76 million) before interest and tax in the financial year ending June 30.
Qantas said the closure would release up to A$500 million to be recycled into its core businesses based on the value of the 13 planes, including the ability to replace costly leased aircraft that Australia's Jetstar Airways is using domestically.
Jetstar Asia will gradually reduce its schedule before closing on July 31, and customers on cancelled flights will be offered full refunds and moved onto other airlines where possible.
Qantas said the affected employees will get redundancy benefits and support to find jobs within the Qantas group or other airlines.
International operations at Qantas' other two budget carriers, Jetstar Airways and Japan-based Jetstar Japan, will not be affected, the airline added.
($1 = 1.5380 Australian dollars) — Reuters
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