Jetstar Asia suspends three routes as network experimentation continues

Singapore-based LCC Jetstar Asia has suspended three of its newest routes, highlighting the challenges of finding new profitable destinations in the crowded and intensely competitive Southeast Asian market.


Highlights:

  • Jetstar Asia has suspended services to Hat Yai, Palembang and Pekanbaru;
  • The three routes were all launched in recent years under a strategy of trying to find underserved destinations in the crowded Southeast Asia market;
  • Jetstar Asia has launched services to Xuzhou in China, which is not served from Singapore by any other airline.

Jetstar Asia quietly operated its last flights to Palembang and Pekanbaru in Indonesia in Jan-2019. Its last flight to Hat Yai in Thailand was operated in Dec-2018.

Jetstar launched services from Singapore to Palembang and Pekanbaru in late 2015 and operated both routes with three weekly frequencies. Hat Yai was launched in late 2017 and was served with four weekly flights.

Scoot is now the only airline competing on all three routes. Scoot took over Singapore-Palembang and Singapore-Pekanbaru from sister full service airline SilkAir in late 2017 and mid 2018 respectively. The switch to low-cost Scoot likely intensified competition, impacting Jetstar’s yields and leading to its withdrawal.

Singapore-Hat Yai route has been served for several years by Scoot and predecessor Tigerair. Jetstar’s withdrawal likely indicates the market ultimately proved too small and price sensitive to support two competitors.

The three suspensions were not announced by Jetstar. This is not unusual for route suspensions but surprisingly they were not reported by any media outlet or databases monitoring route changes.

Jetstar Asia has redeployed some of the capacity to launch three weekly flights to Xuzhou in China and add a fourth frequency to Okinawa in Japan. Okinawa is another new Jetstar Asia destination that apparently has been more successful.

As The Blue Swan Daily highlighted in a prior report, Jetstar Asia has been focusing network expansion in recent years on small and underserved destinations. While Hat Yai, Palembang and Pekanbaru were obviously not successful the airline is undeterred in pursuing this strategy, recognising it is difficult to pick winners every time.

The launch of Singapore-Xuzhou at the end of Jan-2019 continues this strategy. Jetstar Asia is the only airline serving this route. Xuzhou has lower risk than the three destinations that were dropped as most seats are being block booked by the Nanjing Oriental International Travel Agency.

The launch of Xuzhou and suspension of Hat Yai, Palembang and Pekanbaru reduces Jetstar Asia’s network to 25 destinations. Its China network expands to four destinations (Haikou, Jieyang, Sanya and Xuzhou) although this is still down from a high of seven Singapore-China routes back in 2011.

Jetstar Asia’s Thailand network is now down to just two destinations – Bangkok and Phuket. This is somewhat surprising given the huge size of Thailand’s inbound market and the growing popularity of secondary destinations in Thailand.

The airline’s Indonesian network is back to the four original destinations of Bali, Medan, Jakarta and Surabaya. Jetstar Asia has served all four for several years, initially inheriting them from its acquisition of Singapore-based LCC Valuair in 2005.

In Indonesia, Jetstar Asia added capacity to Bali in 2018 and is looking at adding capacity later this year to Medan, which along with Palembang and Pekanbaru is located in Sumatra. AirAsia and Garuda Indonesia both dropped Singapore-Medan in 2018, leaving Jetstar Asia and SilkAir as the only competitors. Medan is not on the long list of upcoming route transfers from SilkAir to Scoot, which can only be good news for Jetstar.