Qantas today announced it was closing the group’s Singapore-based budget airline Jetstar Asia as it moves to strengthen its core business in Australia and New Zealand.

The decision will free $500 million for Qantas Group to invest in its fleet renewal plans. Around 500 lobs will be lost from the Asia region.

Qantas says that 13 Jetstar Asia Airbus A320 aircraft will be progressively redeployed to Australia and New Zealand, bringing more low fares and local jobs.

Jetstar Asia has been impacted by rising supplier costs, high airport fees, and intensified competition in the region.

Qantas Group chief executive Vanessa Hudson said the company had been hit with some supplier costs rising by up to 200 per cent, materially changing its cost base.

“We are incredibly proud of the Jetstar Asia team and the work they have done to deliver low fares, strong operational performance and exceptional customer service,” she said.

“This is a very tough day for them.”

Hudson said Jetstar Asia’s 13 mid-life A320 aircraft will be progressively redeployed to core markets in Australia and New Zealand to create more than 100 local jobs and more low fares, including on regional routes.

“We are currently undertaking the most ambitious fleet renewal program in our history, with almost 200 firm aircraft orders and hundreds of millions of dollars being invested into our existing fleet,” she said.

The airline is expected to post a $35 million underlying Earnings Before Interest and Taxes (EBIT) loss this financial year, prior to the closure decision.

Jetstar Asia was launched more than 20 years, but has recently faced stiff competition from other low-cost carriers and a hike in operating costs.

The airline will stop operating on July 31. Flights will run for the next seven weeks.