Qantas Shuts Jetstar Asia Due to 10%+ Cost Surge at Changi Airport

Qantas Airways Ltd. has announced the closure of its low-cost subsidiary, Jetstar Asia, primarily due to escalating operational costs at Singapore's Changi Airport. The airline has faced significant cost increases, including double-digit rises in fuel, airport fees, ground handling, and security expenses. These rising costs have made it increasingly difficult for Jetstar Asia to maintain profitability.

The closure of Jetstar Asia is part of a broader strategic restructuring effort by the Qantas Group. The airline has indicated that the decision to shut down Jetstar Asia is driven by the need to streamline operations and focus on more profitable ventures. The closure is expected to result in a one-off cost of approximately $175 million, primarily due to redundancy and restructuring expenses. The first third of these costs are anticipated to be incurred this year.

The higher airport fees imposed by Changi Airport, which were implemented to fund a $3 billion facility upgrade, have been a significant contributor to the rising costs. These fees, which came into effect on April 1, have added to the financial burden on Jetstar Asia, making it unsustainable for the airline to continue operations in Singapore.

Jetstar Asia is forecast to post an underlying EBIT loss of AU$35 million this year. The airline will cease operations on July 31, 2025, with a gradual reduction in flights leading up to that date. This decision reflects the Qantas Group's commitment to strategic restructuring, which aims to support long-term growth and profitability.

The closure of Jetstar Asia is a strategic move by Qantas to address the financial challenges posed by rising operational costs. By ceasing operations in Singapore, the airline can focus on more profitable markets and reduce its overall cost base. This decision underscores the importance of cost management in the aviation industry, where rising expenses can quickly erode profitability.