Transport Minister Lui Tuck Yew told parliament that Flight SQ351, which was headed to Singapore from Copenhagen, was just 90 kilometres from the Malaysian plane -- a distance covered within minutes by passenger jets.
All 298 people onboard Malaysia Airlines flight MH17 were killed when it was shot down in rebel-held territory on July 17.
"At the time of the downing of MH17, flight SQ351 from Copenhagen was estimated to be approximately 90 kilometres away," Lui said, responding to questions from lawmakers.
"As there were no restrictions for flights above 32,000 feet (9,800 metres) or any information suggesting threats to aircraft at those heights, SIA, like many other airlines plying between Europe and Asia, had continued to use that airspace," he said.
"As soon as SIA received news of the incident, they immediately re-routed all their flights to avoid Ukrainian airspace entirely."
Hours after the disaster, air traffic tracking site Flightradar24 posted images on its Twitter feed showing the doomed aircraft's last position was between SQ351 and Air India Flight AI113, a Boeing 787 Dreamliner en route from New Delhi to Britain's second city Birmingham.
The United States accuses insurgents of downing MH17 with a surface-to-air missile likely supplied by Russia, while Moscow and the rebels blame the Ukrainian military.
Lui defended SIA for sticking with the flight path despite the fact that several Ukrainian military aircraft had been shot down in the area by rebels just weeks before the MH17 tragedy.
"It goes to show that 20/20 hindsight is most prescient in those who operate from the sidelines," Lui said, when an independent lawmaker suggested SIA had ignored "tell-tale signs" about the danger facing civilian aircraft in the region.
Lui said the airline, majority-owned by state investment arm Temasek Holdings,has been instructed by the Civil Aviation Authority of Singapore to review the safety of flight routes over conflict zones following the MH17 tragedy.