Qantas shuts Jetstar Asia and shifts fleet to Australia

Jetstar Asia, which began operations in 2004, will continue to fly for the next seven weeks on a progressively reduced schedule, before its final day of flying on 31 July.

It significantly comes after new chairman John Mullen said in March that the airline’s ageing fleet ““should have been replaced earlier” and led to a reputation for “crap” service.

Vanessa Hudson, chief executive of Qantas Group, said: “We are incredibly proud of the Jetstar Asia team and the work they have done to deliver low fares, strong operational performance and exceptional customer service.

“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 per cent, which has materially changed its cost base.”

Qantas said that affected Jetstar Asia employees will be provided redundancy benefits as well as employment support services, while it is working to find job opportunities across the group and with other airlines.

It also insisted the decision would not affect Jetstar Airways’ domestic and international operations in Australia and New Zealand or Jetstar Japan.

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Customers with existing bookings on cancelled flights will be offered full refunds, while the airline would reaccommodate customers onto other airlines where possible.

The decision was made by both the Qantas Group, which owns 49 per cent of the airline, and Singapore firm Westbrook Investments, which owns the remaining shares.

“Jetstar Asia’s 13 mid-life A320 aircraft will be progressively redeployed to core markets in Australia and New Zealand to support fleet renewal and growth and create more than 100 local jobs and more low fares, including replacing leased aircraft in Jetstar Airways’ domestic operation to reduce its cost base,” said Qantas in a statement to the ASX.

“Some of the aircraft will also help accelerate fleet renewal in Qantas’ regional operations that service the critical resources sector in Western Australia.

“These strategic fleet decisions come as Qantas receives its first Airbus A321XLR later this month and the first Project Sunrise A350-1000ULR in calendar year 2026.”

It added that the closure of Jetstar Asia will result in “one-off redundancy and restructuring costs as well as the non-cash expensing of historical foreign currency translation losses from equity reserves and asset write-downs from consequential changes in the Group’s fleet structure.”

“The combined impact is currently estimated to be approximately $175 million, with approximately a third in FY25 and the remainder across FY26, which will be taken outside of underlying earnings.

“The direct pre-tax cash impact will be approximately $160 million, predominantly in FY26, including unwinding Jetstar Asia’s working capital.

“This will be materially mitigated by working capital benefits from growth in Jetstar Airways utilising the redeployed aircraft, and from consequential tax adjustments impacting tax payments across the Group in FY26 and future years.”

Mullen previously said Qantas’ ageing fleet meant its customers were not getting the optimum experience, whether from cabin experience or mechanical issues.

Jetstar Asia’s fleet of A320-200s is 12 to 15 years old, significantly younger than the bulk of Qantas’ current aircraft flying domestically.

“Unless you’ve got a lot of spare capacity, that cascades down through a whole lot of flights,” Mullen said.

“We need to have another year or 18 months of the new aircraft coming on to start to deserve the respect that hopefully we will generate.”