📒🎞️ Quick Take: Flight Turbulence in Asia Pacific
A handful of airlines are flying into a storm in Asia Pacific as they struggle to scale up to compete with larger rivals.
Jetstar Asia, Rex Airlines and Bonza Aviation ran aground, while SriLankan Airlines and Garuda Indonesia must undergo a restructuring.
VietJet pleaded financial constraints as a legal defence against its lessor, yet it has been announcing plane orders, route expansions and financing deals.
A handful of airlines are flying into a storm in Asia Pacific as they struggle to scale up to compete with larger rivals.
Jetstar Asia, the Singapore budget arm of Australia’s Qantas Airways, shocked travellers and staff when it announced its impending closure, but aviation analysts say the writing was on the wall as it was only profitable for six out of 20 years in operation. Rising costs and tough competition had “fundamentally challenged” the airline’s ability to offer low fares, Jetstar Group CEO Stephanie Tully reportedly said.
While Singapore Airlines’ budget unit Scoot ramped up flights and destinations, Jetstar Asia’s latest fleet only stood at 13 planes, down from 18 before the pandemic, and it had little presence in the major aviation markets of India and China, according to an expert interviewed by the Straits Times.
Down under, Australian carriers Rex Airlines and Bonza Aviation both ran aground last year, leaving passengers stranded and various legal issues to be resolved, according to an article written by law firm DLA Piper.
Rex entered a voluntary administration in July 2024 after its foray into capital cities – where it competed directly with Qantas and Virgin Australia – resulted in heavy losses, the Australian Financial Review (AFR) reported. Binding bids for Rex were due last week and private equity firm Anchorage Capital Partners was among the parties that submitted a proposal to buy it, according to AFR.
In South Asia, Sri Lanka is accelerating the restructuring of its flag airline after being prodded by the International Monetary Fund (IMF), which bailed the nation out of bankruptcy. In a notice dated 29 May 2025, SriLankan Airlines told holders of its USD 175 million bond due 2024 that it had appointed Lazard and Norton Rose Fulbright as its financial and legal advisers, respectively, for a potential restructuring.
SriLankan Airlines took in a new Airbus plane to increase its fleet to 23, with plans to add two more by the end of this year. However, I wrote last week that even with the upsized fleet, it would still be much smaller than the battalion commanded by Singapore Airlines, which operated 163 aircraft as of February 2025.
The Singapore flag airline seems to be an outlier in the region, as it recently awarded staff with 7.45 months of bonus on the back of a record annual profit. This turnaround came after it received a pandemic support package of up to SGD 19 billion (USD 13 billion) from state-linked entities in 2020.
In contrast to Singapore’s bold bazooka, Indonesia has so far given a drip feed of state funds to its perpetually ailing airline Garuda Indonesia. I flagged in April 2025 that Garuda was likely headed towards a fourth restructuring as it grappled with aircraft maintenance costs and a cap on domestic fares.
I also wrote that Garuda may receive some funds from sovereign fund Danantara to reactivate its grounded planes, but it could still be weighed down by expensive legacy leases. Last week, Garuda announced that it will seek shareholder approval on 30 June 2025 for a proposed restructuring and changes in management.
Elsewhere in Southeast Asia, Vietnamese budget carrier VietJet had a legal setback in its long-running battle against one of its lessors. VietJet – which is controlled by Vietnamese billionaire Nguyen Thi Phuong Thao – was ordered by an English court to pay around USD 180 million to a unit of London-based buyout fund FitzWalter Capital.
Despite VietJet’s allegedly “significant financial constraints”, it has been announcing a string of aircraft orders, route expansions and financing deals. In fact, the airline is reported to be in talks to order around 100 more Airbus planes. My takeaway is either VietJet has the money but pleaded poverty to avoid paying its nemesis, or it doesn’t have the money but is putting up a selective show of strength.
The relationship between airlines and their lessors seems to be a complicated one. As a friend said: “Leases are just the operating cost. It’s actually very difficult to get rid of them because lessors can always take the planes away. And once you are a bad lessee it’s harder to get planes. The airline business is hard.”