Qantas to close Singapore-based budget airline Jetstar Asia, citing Changi Airport fee hike

Jetstar Group Chief Executive Officer Stephanie Tully said rising costs have been felt across the entire ecosystem the airline operates out of.

Higher airport fees at Singapore’s Changi Airport, which took effect on April 1 to fund a S$3 billion (US$2.3 billion) upgrade, were partly responsible. "The airport fees are a part of that. That has had an impact on the business," Tully said, as quoted by Bloomberg.

Qantas group chief executive Vanessa Hudson said Qantas is "incredibly proud" of the Jetstar Asia team.

"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%, which has materially changed its cost base."

The Singapore-based regional carrier's 500 staff will be laid off and receive redundancy benefits as well as help finding new jobs, AFP quoted the Australian group as saying.

Passengers with canceled flights on the airline -- which flies to 16 Asian destinations -- will be offered refunds, Qantas said.

Jetstar Asia was expected to make an underlying loss of A$35 million (US$23 million) this financial year prior to the closure decision, according to Qantas, which owns 49% of the carrier.

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 A$500 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% shareholder, Westbrook Investments.