The shutdown of Singapore-based airline Jetstar Asia is a sign of turbulent times ahead for budget carriers in the region as they grapple with higher costs and stiffer competition, aviation analysts have said.
On Wednesday, Jetstar Asia, the low-cost arm of Australian airline Qantas, announced that it would close down at the end of July.
The decision followed a review of the budget airline, which had in recent years been challenged by rising supplier costs, airport fees, aviation charges and competition in the region, Jetstar group said in a statement.
Jetstar added that the increase in costs was projected to continue, putting unsustainable pressure on its ability to offer low fares, which was fundamental to its business model.
“Unfortunately, increasing competition in the region, high market capacity and rises in supplier costs and airport fees over recent years mean that we simply can’t continue to offer the low fares that we are proud of and committed to,” Jetstar group chief executive Stephanie Tully said.
Linus Benjamin Bauer, founder of aviation consultancy BAA & partners, said Qantas was rightly reallocating capital to higher-yield opportunities.
“This is a warning sign. In a post-Covid world, cost discipline and market relevance are non-negotiable. Expect more market exits or strategic retrenchment, especially in fragmented, overserved low-cost carrier markets like Southeast Asia,” he said.
