Qantas intends to shut down Jetstar Asia, marking a significant change in its Asian operations.
Losing the Jetstar Asia Race
June 10, 2025
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The Jetstar Asia Race Ends
June 10, 2025
The Singapore-based, low-cost subsidiary of the Qantas Group, Jetstar Asia, is calling it quits, citing growing challenges it has faced in recent years. This decision comes along with Westbrook Investments, the airline's majority shareholder.
Jetstar Asia has earned a reputation for top-notch customer service and operational dependability. However, it has been put under significant stress due to:
- Skyrocketing supplier costs (some as high as 200%),
- Ballooning airport fees, and
- Ferocious low-cost competition across the region.
These factors have made it increasingly difficult for the airline to compete with Qantas Group's core markets, leading to an anticipated $35 million underlying EBIT loss for this financial year.
Jetstar Asia will phase out its operations progressively over the next seven weeks, with its final flight set for July 31, 2025. This decision affects only Jetstar Asia's intra-Asia operations, and it has no bearing on Jetstar Airways' domestic and international services in Australia and New Zealand, nor Jetstar Japan's operations.
Jetstar Asia's Destinations
Jetstar Asia operates 16 ports across 8 markets, with Singapore as its primary hub and the Qantas Group's largest overseas center. The airline serves cities such as:
- Bangkok
- Manila
- Broome (seasonal)
- Okinawa
- Clark
- Osaka (Kansai)
- Denpasar
- Penang
- Haikou
- Phnom Penh
- Jakarta
- Phuket
- Krabi
- Surabaya
- Kuala Lumpur
- Wuxi
Qantas Group CEO Vanessa Hudson stated:
"Jetstar Asia has been a trailblazer in the Asian aviation market for over 20 years, offering affordable air travel to millions of customers in Southeast Asia.
"We are incredibly proud of the Jetstar Asia team and their hard work delivering low fares, excellent operational performance, and exceptional customer service. This is a tough day for them.
"Despite their best efforts, we have witnessed some supplier costs surge by as much as 200%. This vastly altered Jetstar Asia's cost base.
"I would like to express my heartfelt appreciation to the remarkable Jetstar Asia team for their impact on aviation in the region over the past two decades."
Passengers with bookings on cancelled flights will receive full refunds, and the Group will assist in finding alternatives where feasible. Everyone impacted will receive severance benefits and job placement support.
Singapore remains a crucial international hub for Qantas and will keep providing access to numerous airline partners serving Asia through codeshare and interline arrangements.
Jetstar Asia will settle its financial obligations to customers, vendors, and employees, with support from Qantas.
Capital Shift for Fleet Renewal and Growth
The closing of Jetstar Asia allows the Qantas Group to divert up to $500 million in fleet capital to its strongest-performing ventures, adhering to its prudent capital allocation strategy. Jetstar Asia's 13 mid-life Airbus A320s will move on to domestic and regional markets in Australia and New Zealand, where they:
- Aid in fleet renewal and growth,
- Help reduce operating expenses by replacing leased aircraft,
- Enable the expansion of low-fare initiatives, and
- Create over 100 jobs.
Some aircraft will also be allocated to QantasLink's regional network, particularly in Australia, supporting critical resource-sector routes.
This comes as Qantas receives its first Airbus A321XLR this month and prepares for the arrival of the first Project Sunrise A350-1000ULR in 2026.
Hudson continued, “We are currently leading the most ambitious fleet modernization program in our history, with nearly 200 firm aircraft orders and hundreds of millions poured into our existing fleet.
"We are making sound decisions to redistribute resources across our business and invest in areas that produce returns, like strategic growth projects such as Project Sunrise."
Financial Implications of Jetstar Asia Shutdown
The closure will generate:
- One-time redundancy and restructuring costs,
- The non-cash write-off of historical foreign exchange losses, and
- Asset write-downs due to changes in the fleet.
These are projected at around $175 million, with just over a third to be recognized in FY25 and the rest in FY26 outside of underlying earnings.
The direct pre-tax cash impact is estimated at $160 million, primarily in FY26, primarily from unwinding Jetstar Asia's working capital. This will mainly offset by:
- Working capital benefits from redeployed aircraft supporting Jetstar Airways' growth, and
- Tax adjustments that reduce the Qantas Group's tax payments beginning FY26.
Qantas Group's 2H25 Financial Review
- Jetstar Asia's financial performance deteriorated in the second half, with an expected underlying EBIT loss of AUD 25 million.
- Domestic capacity expansion was lower than expected due mainly to Cyclone Alfred, which disrupted services across Queensland, leading to a $30 million earnings impact.
- International capacity is forecast to increase by 9%, down from 12% guidance, due to labor strikes affecting Qantas' Finnair wet lease.
- Despite the negative impacts, the Group continues to experience strong demand in both Domestic and International sectors, with unit revenue and capital expenditure in line with projections.
Jetstar Asia's shutdown and the subsequent reallocation of fleet resources could have significant implications for travelers, as the shift in aircraft could lead to lower operating expenses, fleet renewal, growth in domestic and regional markets, and the creation of over 100 new jobs. For those interested in lifestyle and travel, this development might bring changes to flight options and prices within Australia and New Zealand. Additionally, the closing of Jetstar Asia may impact the Asian aviation market in the coming months as other low-cost carriers adjust to the new competitive landscape.
