Jetstar responds to parent Qantas’ resumption of Singapore-London service by reducing capacity to Singapore

12 January, 2018

Jetstar is significantly reducing capacity in the Australia-Singapore market as parent Qantas adds Australia-Singapore capacity in conjunction with the resumption of Singapore-London flights.

The Jetstar Group currently operates 18 weekly flights from Australia to Singapore including seven from Darwin, seven from Perth and four to Melbourne. The Darwin and Perth routes are served with Jetstar Asia A320s while Melbourne is served with Jetstar Airways 787-8s.

Jetstar Asia is dropping Perth-Singapore entirely on 25-Mar-2018 and at the same time Jetstar Airways is cutting Melbourne-Singapore to just two weekly frequencies. Jetstar Asia is maintaining four to seven weekly flights on Darwin-Singapore (depending on the time of year), resulting in six to nine total Australia-Singapore frequencies for the Jetstar Group.

Up to nine weekly flights, generating less than 2,000 weekly one-way seats, gives Jetstar a very small presence in the Australia-Singapore market compared to the last several years. The group's Australia-Singapore operation peaked at nearly 30 weekly flights and 6,000 weekly one-way seats in early 2015.

Source: CAPA - Centre for Aviation and OAG

As recently as Sep-2017, Jetstar still had 23 weekly flights and over 5,000 weekly one-way seats in the Singapore-Australia market. Jetstar's share of seat capacity in the Australia-Singapore market will drop from approximately 7% in Sep-2017 to less than 3% in Apr-2018.

Jetstar Airways initially cut Melbourne-Singapore in Oct-2017 from five to seven weekly frequencies (depending on the time of year) to four weekly frequencies. Jetstar Asia initially cut Perth-Singapore in Nov-2017 from 11 to 13 weekly flights (depending on the time of year) to seven weekly frequencies.

Jetstar Asia's former subsidiary, Valuair, initially launched Perth in 2004, providing the first low cost option for the Perth-Singapore market. Jetstar Asia acquired Valuair in 2005.

Jetstar Airways launched Melbourne-Singapore in 2010 and served the route daily until Apr-2013. Melbourne-Singapore has been the group's only long haul (widebody) route in the Singapore market since 2014, when Jetstar dropped Singapore-Auckland. Jetstar also dropped Singapore-Beijing and Singapore-Osaka in 2013 and at one point had aspirations to develop Singapore into a widebody base with several long-haul routes.

Jetstar Asia took over the Darwin-Singapore route from Jetstar Airways in Mar-2014. Jetstar Asia has since served the route with four to seven weekly frequencies depending on the time of year.

The Qantas Group has pointed to upcoming changes in its full-service Singapore operation, which includes additional Qantas capacity on the Melbourne-Singapore and Perth-Singapore routes from Mar-2018, in explaining the cuts at Jetstar. However, Jetstar also has been impacted by intensifying competition and overcapacity in the Australia-Singapore market.

The upcoming changes by Qantas essentially reintroduces capacity which had been cut in 2013, when Qantas switched the stopover point of its London flights from Singapore to Dubai. Qantas announced in Aug-2017 plans to switch back to Singapore as a stopover point for London from late Mar-2018 and at the same time add capacity on Sydney-Singapore and Melbourne-Singapore.

Jetstar already had a significant presence in the Australia-Singapore market before Qantas cut Australia-Singapore capacity in 2013. Jetstar had approximately an 8% share of Australia-Singapore seat capacity in 2012. This indicates that Jetstar was able to effectively operate alongside Qantas when Qantas initially had a larger Singapore presence.

What has changed dramatically since 2012 is the overall Australia-Singapore market. Jetstar has particularly been impacted by the launch of Scoot widebody service in the Perth-Singapore and Melbourne-Singapore markets. Scoot launched Perth in late 2013 and currently serves the route with five to seven weekly frequencies depending on the time of year. Melbourne was added in late 2015 and is served with four to six weekly flights depending on the time of year.

Perth-Singapore is within range of narrowbody aircraft as it is a five-hour route. However, widebody aircraft are much more efficient on routes of this length. Jetstar Asia has a much higher unit cost with its A320s compared to Scoot's 787s, making it hard to compete.

Qantas resumed Perth-Singapore in 2015, a year after dropping the route, but generally competes in a different segment of the market. Qantas currently serves Perth Singapore with seven to 14 weekly frequencies depending on the time of year and will be introducing a schedule of 14 weekly frequencies for a larger portion of the year from Mar-2018.

Melbourne-Singapore is a larger market but essentially has three low fare competitors with Scoot, Jetstar and Emirates. The Melbourne-Singapore route has suffered from overcapacity since Scoot's entrance. Scoot has also struggled but Jetstar, which has more attractive alternatives for its limited 787 fleet, has blinked first. While Qantas is adding capacity on Melbourne-Singapore, the additional capacity will be absorbed by passengers connecting to the resumed Singapore-London service and should not significantly impact Jetstar.