Latest news with #WestbrookInvestments
HKFP
a day ago
- Business
- HKFP
Australia's Qantas to close budget carrier JetStar Asia
Australian airline Qantas said Wednesday it will close its loss-making budget carrier Jetstar Asia, axing 500 Singapore-based jobs. The low-cost subsidiary will cease operations on July 31 as part of a 'strategic restructure', Qantas group chief executive Vanessa Hudson said. Qantas is 'incredibly proud' of the Jetstar Asia team, Hudson said in a statement. 'This is a very tough day for them. Despite their best efforts, we have seen some of Jetstar Asia's supplier costs increase by up to 200 percent, which has materially changed its cost base.' Passengers with cancelled flights on the Singapore-based regional carrier — which flies to 16 Asian destinations — will be offered refunds, Qantas said. Jetstar Asia was expected to make an underlying loss of Aus$35 million (US$23 million) this financial year prior to the closure decision, according to Qantas, which owns 49 percent of the carrier. The Asian regional carrier's 500 staff will be laid off and receive redundancy benefits as well as help finding new jobs, the Australian group said. Jetstar Asia's 13 A320 aircraft will be progressively redeployed to Australia and New Zealand, Qantas said, creating more than 100 local jobs. Shutting the carrier would deliver up to Aus$500 million (US$326 million) for Qantas to support the group's fleet renewal program, it said. Qantas said the decision to shutter Jetstar Asia was taken together with the offshoot's 51-percent shareholder, Westbrook Investments.
CNA
2 days ago
- Business
- CNA
Snap Insight: Jetstar Asia closure - the writing was on the wall
SINGAPORE: The decision for Jetstar Asia to close shop in Singapore on Jul 31 was not entirely a surprise. The writing was on the wall: The low-cost carrier has been largely loss-making throughout its existence, only profitable for six of its 20 years. This year, it expects to lose A$35 million (US$22.8 million). Still, the news on Wednesday (Jun 11) came as a shock, due to over 500 employees losing their jobs as well as the suddenness of its exit. It had added a new destination, Labuan Bajo, as recently as March. The Jetstar Asia business model has been described as the 'airline-within-airline' strategy. It is 49 per cent owned by Australia's national carrier Qantas and 51 per cent by Singapore company Westbrook Investments, with links to a local tour agency. It was first introduced in the United States in 2003, when United Airlines formed Ted to fend off budget competitors such as JetBlue and Frontier. Five years later, United was forced to shutter Ted due to higher jet fuel prices. Jetstar Asia's demise is different, people close to Qantas told me. This strategy is not uncommon in the industry: think Singapore Airlines and Scoot, or Lufthansa and German Wings. Less common though, was Qantas' decision to base Jetstar Asia in Singapore in a bid to focus on this regional market, separate from Jetstar Airways in Australia. BUDGET AIRLINES MUST BE RUTHLESSLY COST-EFFICIENT The main reasons for closure, these observers argued, stemmed from changes in the dynamics at Changi Airport and the high cost of being based in Singapore when low-cost carriers have to be ruthlessly cost-efficient. First, the rise in the Singapore dollar versus the Australian dollar has put tremendous strain on Qantas. In the past six months, the SGD has appreciated by more than 2 per cent against the AUD. Second, some Jetstar Asia officials felt it was hard done by when it was forced to move from Terminal 1 at Changi (where Qantas flies into and thus allowing for seamless connectivity) to Terminal 4, the budget terminal. This meant inconvenience for passengers connecting between Jetstar Asia flights and Qantas and other major airlines. The budget terminal is the only one without a Skytrain connection to the three main terminals, although landside and airside buses are available. The terminal change was publicly opposed by the airline when it was announced in July 2022 and only took place in March 2023, after months of negotiation. In recent times Jetstar Asia's shareholders were also said to be concerned over Changi Airport Group's introduction of new levies for passengers and airlines alike, due to higher running costs there. LOW-COST JUST IN NAME? The immediate implications to operations at Changi Airport, fortunately, are not severe given that Jetstar Asia makes up less than 5 per cent of all flights at the airport. The shutdown will however create a new vacuum for 16 intra-Asia routes once plied by the airline, likely to be mopped up by the likes of Malaysia's AirAsia and Indonesia's Lion Air Group. Trade associations such as the International Air Transport Association (IATA) and the Association of Asia Pacific Airlines (AAPA) remain positive on the outlook for airlines this year. While no other low-cost carriers in the region are expected to close down, several, like Vietjet, face financial constraints and have been unable to completely shrug off structural issues brought about by the COVID-19 pandemic. Budget airlines may soon run into the problem of being low-cost just in name. Higher operating and ancillary costs, amid increased competition and uncertainty linked to the wider global economy, mean the gap is narrowing between legacy airlines and low-cost carriers in the short- to medium-haul sector.
eNCA
2 days ago
- Business
- eNCA
Qantas to close Asian budget airline offshoot
SYDNEY - Australian airline Qantas said it will close its loss-making budget carrier Jetstar Asia, axing 500 Singapore-based jobs. The low-cost subsidiary will cease operations on July 31 as part of a "strategic restructure", Qantas group chief executive Vanessa Hudson said. Qantas is "incredibly proud" of the Jetstar Asia team, Hudson said in a statement. "This is a very tough day for them. Despite their best efforts, we have seen some of Jetstar Asia's supplier costs increase by up to 200 percent, which has materially changed its cost base." Passengers with cancelled flights on the Singapore-based regional carrier -- which flies to 16 Asian destinations -- will be offered refunds, Qantas said. Jetstar Asia was expected to make an underlying loss of Aus$35 million (US$23 million) this financial year prior to the closure decision, according to Qantas, which owns 49 percent of the carrier. The Asian regional carrier's 500 staff will be laid off and receive redundancy benefits as well as help finding new jobs, the Australian group said. Jetstar Asia's 13 A320 aircraft will be progressively redeployed to Australia and New Zealand, Qantas said, creating more than 100 local jobs. Shutting the carrier would deliver up to Aus$500 million (US$326 million) for Qantas to support the group's fleet renewal program, it said. Qantas said the decision to shutter Jetstar Asia was taken together with the offshoot's 51-percent shareholder, Westbrook Investments.
Skift
2 days ago
- Business
- Skift
Qantas Group to Shut Down Jetstar Asia Operations
Moral of the story: Being low-cost is no longer enough. Without scale, efficiency, and solid financial backing, it's getting harder for smaller airlines to stay in the game — especially with the kind of cut-throat competition we're seeing in the region. The Qantas Group on Wednesday announced the closure of operations of Jetstar Asia, its low-cost Singapore-based airline, by the end of July. The decision, made with majority shareholder Westbrook Investments, comes after years of mounting pressure on the carrier's cost base and operating environment. The shutdown will displace more than 500 staff based in Singapore. Qantas has committed to offering redundancy packages and job placement assistance, both within the Qantas Group and with other airlines in the region. Jetstar Asia, which currently operates 16 routes across Asia including to Thailand, Indonesia, the Philippines, and Sri Lanka, will wind down with a reduced schedule between now and July 31. This does not impact Jetstar Airways' domestic and international operations in Australia and New Zealand or Jetstar Japan. Despite the closure, Qantas is not exiting Singapore. The city remains its third-largest international hub. The group will continue to serve the market through Qantas-operated flights and a network of nearly 20 codeshare and interline partners. Jetstar Airways will continue to fly from Australia into Asia to all its popular destinations across Singapore, Thailand, Indonesia, Vietnam, Japan and South Korea, Qantas Group said in statement. What Led to the Decision? Listing some of the reason, the airline said it has been hit hard by rising airport charges, supplier costs, and fierce competition. Qantas Group CEO Vanessa Hudson stated, 'We have seen some of Jetstar Asia's supplier costs increase by up to 200%, which has materially changed its cost base.' Qantas Group forecasts Jetstar Asia to record a $35 million underlying EBIT loss this financial year. The group said it is reallocating up to $500 million in fleet capital unlocked from Jetstar Asia into its core businesses to improve long-term returns. Thirteen of Jetstar Asia's mid-life Airbus A320s will be repurposed. Some will support Jetstar's domestic growth, while others will bolster Qantas' regional operations in Western Australia, particularly in the resources sector. The move also supports Qantas' largest-ever fleet renewal program, with the first A321XLR joining the fleet later this month and the long-range A350-1000s arriving from 2026 under Project Sunrise. Project Sunrise is Qantas' plan to launch non-stop flights from Australia's east coast to London and New York from 2026, using specially configured Airbus A350-1000s to cut travel time by up to four hours. Hudson said, 'We're making disciplined decisions which recycle capital across our business and prioritise it to stronger performing segments as well as strategic growth initiatives.' She also highlighted that Qantas is in the midst of its 'most ambitious fleet renewal program in history,' with nearly 200 aircraft on order and the group making significant investment to upgrade the fleet. Lessons from Thai Smile's Exit The decision mirrors the recent closure of Thai Smile Airways by Thai Airways. That budget carrier also faced persistent losses, totaling over THB 20.9 billion across 12 years. Despite its initial promise, Thai Smile struggled to establish sustainable financial performance and was eventually dissolved earlier this month. While Jetstar Asia is not a long-term financial drag on the same scale, both closures reflect broader challenges for low-cost carriers in Asia. Tight margins, high fees, and volatile demand are making it harder for smaller regional brands to compete, especially as full-service carriers consolidate operations to regain profitability. Support Measures Jetstar Asia CEO John Simeone, who joined the airline last year from parent company Qantas, acknowledged the challenges: 'Unfortunately, despite our best efforts, the local market conditions have ultimately impacted our ability to continue to offer the everyday low fares that are our DNA.' The airline has said it would issue full refunds for cancelled flights, including those scheduled after July 31. The airline will be contacting customers impacted by the reduced flying schedule over the next seven weeks with options. Jetstar Asia has also published a dedicated support page for refunds, flight changes, and updated schedules. The Jetstar website's "Travel Alerts" section also offers the latest updates.
