The cost benefit for Aussies as airline axes Asian arm

There are no changes to Jetstar flights connecting Australia to destinations in Asia or Jetstar Japan services.

Jetstar Asia's 13 Airbus A320 planes will replace older or leased aircraft in Australia and New Zealand, which the airline claims will create 100 new jobs.

The shift is a smart move and good news for domestic passengers who may benefit from newer aircraft and lower fares, Sydney University transport professor Rico Merkert says.

"More capacity added to the market has even more competition, say with Virgin or other domestic carriers," Prof Merkert told AAP.

"Airfares should come down in Australia somewhat."

Jetstar Asia is on track to make a $35 million loss by the end of the 2024/25 financial year, while Qantas Group recorded $1.5 billion in earnings in the last six months of 2024.

"Yields here in Australia and demand are very healthy. Qantas would be silly not to try and make use of that and deploy as much capacity as they can," Prof Merkert said.

"It's not easy to come by new aircraft at the moment, so even if they go to Airbus or Boeing, those aircraft wouldn't become available before 2027, 2028 or something like that.

The fastest way of boosting capacity was redeploying aircraft from Asia, he said.

In a statement to the ASX, Qantas Group attributed Jetstar Asia's closure to greater competition, rising supplier costs and high airport fees.

Qantas Group chief executive Vanessa Hudson said it was a "very tough day" for staff and the airline had made low-cost travel accessible to millions of customers over more than 20 years.

"We have seen some of Jetstar Asia's supplier costs increase by up to 200 per cent, which has materially changed its costs base," Ms Hudson said.

Qantas's share price slid almost one per cent after the announcement.

Passengers with bookings for cancelled flights will be entitled to refunds or moved onto other flights.

The airline said Jetstar Asia employees were entitled to redundancy benefits and would be re-employed within Qantas where possible.

Australian Travel Industry Association chief executive Dean Long didn't expect Jetstar Asia's closure to affect many local customers.

"Primarily the markets where Australians are wanting to travel to, there's already been direct connectivity so we actually haven't had to use any of the subsidiary airlines," Mr Long said.

Qantas owns 49 per cent of Jetstar Asia, while Singapore company Westbrook Investment is the majority owner.

The airline said the move would "unlock" up to $500 million in capital, which would be reinvested into its core businesses.

Ms Hudson said the airline was focusing on growth areas including ultra long-haul flights, under its "Project Sunrise" initiative, with the first plane capable of flying direct from Sydney to London and New York due to arrive in July.

Qantas is also launching new routes in the second half of 2025, including Adelaide to Auckland and Perth to Auckland and Johannesburg.

The price of Australian domestic economy airfares were 12 per cent cheaper in January and February 2025 than the same time in 2024, according to corporate travel advisers FCM Consulting.

That's despite the Australian Competition and Consumer Commission warning the dominance of Qantas and Virgin had limited local market competition.

More flights between Australia and Europe will be unveiled in the second half of 2025 due to Virgin Australia's new partnership with Qatar Airways, which the airlines claim will put downward pressure on international prices.