Singapore-based budget airline Jetstar Asia will close down at the end of July, with more than 500 employees laid-off.
The low-cost airline has struggled with rising supplier costs, high airport fees and increased competition in the region.
Qantas, which part owns the budget carrier, says the closure will provide it with A$500m ($325.9m; £241.4m) to invest towards renewing its fleet of aircraft, adding that it will redeploy 13 planes for routes across Australia and New Zealand.
The shutdown of Jetstar Asia will not impact the operations of Australia-based Jetstar Airways, nor those of Jetstar Japan, according to a statement from Qantas.
“We have seen some of Jetstar Asia’s supplier costs increase by up to 200%, which has materially changed its cost base,” said Qantas Group Chief Executive Vanessa Hudson in the statement.
The discount airline, which has operated flights for over 20 years, is set to make a A$35m loss this financial year. It services routes across Asia, including to destinations in Malaysia, the Philippines and Japan.
Jetstar Asia will continue to operate flights for the next seven weeks, although the airline will run a progressively reduced service ahead of its closure on 31 July.
Passengers with bookings on cancelled Jetstar Airways flights will be offered full refunds, while some travellers could also be moved onto routes operated by the Qantas Group.
All employees affected by Wednesday’s announcement will be provided with redundancy benefits.
“We have an exceptional team who provide world leading customer service and best in class operational performance and our focus is on supporting them through this process and helping them to find new roles in the industry,” said Jetstar Group chief executive Stephanie Tully.
Qantas, Australia’s national carrier, will continue to provide low-cost flights to Asia through its Jetstar Airways arm, with the airline offering services from Australia to destinations including Thailand, Indonesia and Japan.
Qantas launched Jetstar Asia in 2004 to get a foothold in the growing low-cost air travel market in Asia, but has faced increased competition from other budget outlets including AirAsia and Scoot.
