No significant impact to travellers after Jetstar Asia closure, say analysts, Singapore News

AsiaOne

a day ago

Travellers will not be significantly impacted with the impending closure of Singapore-based low-cost carrier (LCC) Jetstar Asia, aviation analysts have said.
The Qantas subsidiary announced on June 11 that will be ceasing operations, effective July 31.
Speaking to AsiaOne, V. Mathivaanan, Covering Programme Chair for Diploma in Aviation Management, School of Engineering, Republic Polytechnic, said that Jetstar Asia's closure does not signal a downturn for the larger aviation industry.
"In fact, the global aviation industry is experiencing solid growth, both in passenger travel and financial performance," he said, citing International Air Transport Association (IATA) data which revealed that global passenger demand for April rose by eight per cent year-on-year.
The data also found that international travel demand rose by 10.8 per cent year-on-year, with a record load factor of 84.1 per cent. Escalating cost pressures on LCCs
Mathivaanan highlighted the competitive environment that LCCs face, especially as they grapple with "tight financial margins while having to balance rising operational costs".
Fuel costs, airport parking charges, aircraft maintenance requirements, crew salaries, and aircraft leasing obligations all impact profitability.
Fuel costs, in particular, are highly volatile and fluctuate widely based on geopolitical events, economic conditions, and global demand and supply dynamics.
LCCs have to strike a "delicate balance" between offering attractive prices to retain budget-conscious customers and maintaining profitability through ancillary revenue strategies like charging for seat selection and check-in baggage, Mathivaanan said. Fierce competition
Sixteen intra-Asia routes — to regions in Australia, China, Japan, Thailand, Philippines, Sri Lanka, Indonesia, Malaysia and Singapore — will be impacted by the closure of Jetstar Asia, but the fierce competition between LCCs will reduce the impact that travellers will face, he said.
With Jetstar's closure, Scoot will be the only budget carrier operating out of Singapore.
Compared to Jetstar, Scoot, a SIA subsidiary, flies to over 70 destinations around the world, across 18 countries in Asia-Pacific, the Middle East and Europe.
With other LCCs like Scoot and AirAsia offering similar routes across the region, travellers will have access to a wide range of alternatives.
"Moreover, with the growing popularity of travel comparison platforms such as Skyscanner, Google Flights, and Expedia, passengers are increasingly empowered to search, compare, and book flights that best suit their schedules and budgets," Mathivaanan told AsiaOne.
Mayur Patel, Asia head at consultancy OAG Aviation, echoed similar views.
Any connectivity gaps left by Jetstar Asia's exit can be only filled by other LCCs in the short to medium term due to delays in the delivery of new aircraft and the time needed for capacity changes, the Straits Times quoted him as saying.
Alfred Chua, Asia air transport editor for aviation publication FlightGlobal, told CNA that Scoot is an "obvious candidate" to fill the demand for routes previously unique to Jetstar Asia, especially as it is set to get a new shipment of nine Embraer E190-E2 jets added to its fleet by the end of the year. Changi Airport's role as global hub
Changi Airport announced in November 2024 that it would progressively raise landing, parking and aerobridge charges for airlines, in addition to passenger levies, between 2025 and 2030 to fund new investments and defray rising costs.
The construction of Terminal 5 began on May 14 and is expected to be completed by the mid-2030s.
The closure of Jetstar Asia signals that Changi Airport may not necessarily be ideal for low-cost airlines to operate from, Chua said.
Changi Airport currently has a two-runway system, posing the issue of a potential lack of availability for take-off and landing slots while the three-runway system for Terminal 5 is being built.
Such issues, combined with continually rising costs, make Singapore a high-cost environment which are not favourable to smaller LCCs, he said. Qantas Group pivoting to key regions
Jetstar Asia attributed the closure to "escalating costs in the region".
It has been profitable for only six out of 20 years since it began operating in 2004, said Jetstar Group chief executive Stephanie Tully when speaking to the media.
Parent company Qantas Group released a statement on Wednesday detailing the "strategic restructure which supports its historic fleet renewal programme and strengthens its core businesses in Australia and New Zealand".
Jetstar Asia was projected to post a loss of A$35 million (S$29.2 million) for this financial year prior to the closure decision, due to rising supplier costs, high airport fees, and intensified competition in the region, said the aviation conglomerate.
"Despite their best efforts, 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, CEO of Qantas Group.
By shutting down operations at Jetstar Asia, Qantas will be able to reallocate capital to stronger core markets.
Specifically, A$500 million in fleet capital will be recycled into the group's core businesses, while its 13 aircraft will be progressively redeployed to Australia and New Zealand for fleet renewal plans.
Qantas Group also said that despite Jetstar Asia's imminent closure, Singapore will remain a "critical hub" as the third largest international airport for the group.
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