The Low-Cost Carriers That Have Taken to Singapore Skies
News of the impending shutdown of Jetstar Asia, which will lead to the loss of more than 500 jobs, has sent shockwaves through the aviation sector in Singapore. Jetstar Asia announced its closure with operations ceasing by July 31.
Budget flights have become a staple of the travel industry, accounting for one-third of the 49.8 million passengers who passed through Changi Airport in the first nine months of 2024. As the low-cost carrier scene faces stiff competition, rising fuel costs, price wars, and new market entrants, let’s take a look back at the Singapore budget carrier landscape.
The Evolution of Budget Airlines in Singapore
Budget airlines entered Singapore’s aviation sector in the early 2000s, introducing cheap fares and new destinations to cost-conscious travellers. These no-frills offerings revolutionized travel, making flying—once a luxury—more affordable and accessible.
South-east Asia witnessed a budget travel boom after Malaysia’s Tony Fernandes pioneered the low-cost carrier model in 2002 with AirAsia. Singapore’s first low-cost carrier, Valuair, took its first flight in May 2004 from Changi Airport to Bangkok.
SIA Group, alongside state investor Temasek, launched Tiger Airways in the same year, while the founders of Irish budget carrier Ryanair and Qantas established Jetstar Asia.
Challenges and Growth
The year 2005 brought challenges for low-cost carriers. Rising fuel costs led to increased competition with full-service carriers that undercut budget airlines. Governments, such as Indonesia’s, limited access for foreign budget carriers, leaving Singapore-based airlines with crowded regional routes.
Despite challenges, by 2007, Jetstar Asia and Tiger Airways featured among Changi Airport’s top 10 carriers by passenger numbers. The market continued to expand, with Singapore’s budget carrier market growing by 21 percent from 2004 to 2024, outpacing full-service airlines.
The number of budget flights from Changi Airport soared from 1,705 in 2004 to a peak of 64,618 flights in 2018. However, as airfares and earnings fell, carriers scaled back operations, leading to consolidations and exits.
Scoot’s Emergence
SIA responded to the growing competition by launching Scoot in 2012, targeting medium- and long-haul markets. Tiger Airways focused on short-haul flights but eventually struggled with consecutive full-year operating losses.
SIA took Tiger Airways private in 2016 and subsequently merged Tigerair into Scoot in 2017. This consolidation aimed to enhance cooperation and reduce costs, while Scoot captured more market share.
Jetstar Asia initially enjoyed growth during the early 2010s with increased passenger numbers and an expanded network, reaching earnings of S$18 million in 2011. However, by 2018, its market share had shrunk as Scoot grew rapidly.
Impact of the Pandemic and Beyond
Covid-19 severely impacted the aviation sector, with budget flight numbers at Changi Airport dropping significantly in 2020. Jetstar Asia grounded its fleet and downsized, while Scoot pivoted to cargo operations.
By 2024, as travel recovered, low-cost carriers were poised for growth. Scoot added destinations and expanded its fleet, though Jetstar’s recovery was slower. Analysts noted Jetstar’s 2024 capacity and traffic were about half of pre-pandemic levels.
Challenges such as regional competition, volatile fuel prices, geopolitical tensions, and sustainable aviation fuel mandates continued to pressure low-cost carriers. Rising operation costs and increased airport fees at Changi were additional hurdles.
Despite Jetstar Asia’s closure, the demand for budget travel persists. Changi Airport Group is collaborating with carriers to fill connectivity gaps. While the future of budget travel remains a question of profitability, Singapore skies continue to attract low-cost carriers.
