Singapore Airlines (SIA) is handing over the Penang route to its subsidiary SilkAir.
SilkAir says that starting 1 December it will be increasing its Singapore-Penang service to thrice-daily from twice-daily and SIA will be suspending its once-daily service.
Prior to the introduction of competition on the route early this year, SIA had 18 flights per week using Boeing 777s.
But as competition has increased it has scaled back services on the route and let SilkAir fill the void using Airbus A320s.
Competitors on the route include AirAsia, Jetstar and Tiger Airways.