Jetstar Asia Shutdown Hits Singapore’s Economic Recovery

Singapore, June 11, 2025— Qantas Airways announced the closure of its Singapore-based budget airline, Jetstar Asia, effective July 31, 2025, citing high airport fees, escalating supplier costs, and intense competition from regional low-cost carriers. The shutdown, affecting 16 intra-Asia routes and up to 500 jobs, is set to disrupt Singapore’s economic recovery, straining its tourism-driven economy and aviation sector as the city-state navigates a challenging post-pandemic landscape.

Tourism Revenue Under Threat

Jetstar Asia’s operations, which served 2.3 million passengers in 2024 through Changi Airport, generated significant economic activity for Singapore’s tourism sector, particularly for budget travelers visiting from destinations like Thailand, Vietnam, and Australia. The airline’s exit from unique routes, including Okinawa and Wuxi, could reduce tourist arrivals, impacting hotels, restaurants, and attractions in areas like Marina Bay and Chinatown.

The Singapore Tourism Board estimates that Jetstar Asia’s routes contributed approximately S$280 million to the economy in 2024, and their loss may exacerbate pressures on an industry still recovering from a 10% drop in visitor numbers compared to pre-pandemic levels. “Budget carriers, such as Jetstar Asia, are essential for promoting mass tourism,” said Ms. Cheryl Tan, a hospitality analyst at the Singapore Institute of Management, who warned that reduced connectivity might drive travelers to competing hubs like Bangkok.

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Labor Market Faces New Challenges

The termination of up to 500 jobs at Jetstar Asia, including roles for pilots, cabin crew, and ground staff, will pose a major challenge to Singapore’s labor market, which has seen unemployment stabilize at 2.1% in early 2025. The National Trades Union Congress (NTUC) is working with Singapore Airlines and Changi Airport Group to place affected workers, but opportunities in the aviation sector are limited due to the dominance of Singapore Airlines’ Scoot, which operates a larger fleet of 44 aircraft.

The redeployment of Jetstar Asia’s 13 Airbus A320 planes to Australia and New Zealand offers no local job relief, instead creating over 100 positions abroad. “The sudden loss of these jobs could strain Singapore’s tight labor market,” said Dr. Koh Wei Jie, an economist at the National University of Singapore, noting that affected workers may face difficulties transitioning to non-aviation roles.

Did you know?
Jetstar Asia’s operations supported an estimated 1,200 indirect jobs in Singapore’s aviation supply chain in 2024, including roles in catering, fuel services, and airport logistics.

Small Businesses Feel the Pinch

Jetstar Asia’s closure will impact Singapore’s small and medium enterprises (SMEs), particularly those supplying services like catering, maintenance, and logistics at Changi Airport. These businesses, which rely on contracts with airlines, face revenue declines as Jetstar Asia’s 3% share of Changi’s passenger traffic vanishes. For example, local catering firms supplying in-flight meals and ground handling companies like Dnata could see reduced demand, potentially leading to layoffs or reduced hours.

The Singapore Business Federation is exploring support measures, such as subsidies for SMEs to pivot to other carriers, but the transition could take months. “The ripple effects of Jetstar’s exit will hit our supply chain hard,” said Mr. Lim Hock Seng, a representative of a local aviation supplier, emphasizing that it requires rapid intervention to stabilize affected businesses.

Pressure on Singapore’s Economic Growth

The closure comes at a critical time for Singapore, which is projecting GDP growth of 2.5% for 2025, according to the Monetary Authority of Singapore, driven largely by tourism and trade. Jetstar Asia’s exit could shave up to 0.1% off this growth, analysts estimate, as reduced aviation activity and job losses dampen consumer spending and investor confidence.

The government is pressured to bolster its aviation sector, with initiatives like tax incentives for new carriers being considered to fill the gap left by Jetstar Asia. However, competition from regional hubs like Kuala Lumpur, which offer lower airport fees, could hinder these efforts. “Singapore must act swiftly to maintain its edge as a global aviation hub,” said Ms. Elaine Ng, a policy advisor at the Singapore Economic Development Board.