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After an Ethiopian Airlines flight carrying 149 passengers and eight crew members on board crashed last week, Boeing announced on March 13 that they would recommend grounding of all Boeing 737 Max 8 planes globally out of “out of an abundance of caution.” They have said that they will ground all 371 of the aircraft.
India had already grounded all Boeing 737 Max 8 planes before Boeing’s announcement. As a result, it is likely that there will be a rise in disruption of operations and domestic flight fares. Domestic fares have already increased due to flight cancellations by Jet Airways and IndiGo.
All 18 Boeing 737 Max’s out of the 638 aircraft in Indian skies are now grounded. Grave as this crisis already is, India’s aviation sector has scores of other issues to deal with too. Millstones around the airline industry include rupee depreciation, high aviation fuel prices, excessive parking and landing charges, some inefficient operations and loads of debt and fare wars. Coming to financial and operational performances, Jet Airways, IndiGo, SpiceJet, GoAir and Air India are continuously struggling.
Now with the Boeing 737 Max 8 ban, things are going even more downhill for India’s aviation sector. Jet Airways’ operating fleet have almost halved and Air India’s fleet has now come down by almost 20 percent. Operations six airlines that had bid under UDAN (Ude Desh Ka Aam Naargik) scheme have shut down. These developments will lead to passengers being affected because of higher fares and lesser number of flights.
According to experts, it is difficult to control external factors like fuel prices and rupee-dollar exchange rates, and the government can salvage the current situation by lowering import duties. An aviation consultant suggests that the excise duty on jet fuel can be further brought down to lower the operational costs of the airlines. With the grounding of aircraft, the wet leasing process could be made easier by the DGCA.
The outlook of the domestic sector looks weak despite certain parameters having improved. According to forecasts by Australian aviation consultancy CAPA (Center for Asia Pacific Aviation), the financial year 2020 will witness India losing a collective $550 million to $700 million as compared to an estimated $1.7 billion loss for the 2019 year that will end in March. Ratings agency ICRA in a January note too had predicted a disappointing year for the aviation sector.
The grounding of Boeing 737 MAX aircraft has largely affected SpiceJet and Jet Airways in India, leading to a raft of flight cancellations and major inconvenience for fliers. SpiceJet has 13 Boeing 737 MAX 800 aircraft and Jet Airways has five. The grounding may further lead to 180-200 daily departures being cancelled, causing domestic fares to increase.
However, Sankalp Sinha, director of aviation consultant and Indian advisory, told Rediff.com that this crisis is not likely to affect the industry much in the future. He said that according to the industry norm, Boeing will compensate the airline when an aircraft is grounded for longer duration.
Although SpiceJet and Jet Airways are going through a very bad crisis right now, he said that in the long run, the Indian aviation industry should not be affected much.
According to him, If the grounding of Boeing 737 MAX aircraft continues, there will be an impact on air ticket prices over the next three months from the April quarter.
The Ethiopian Airlines crash on March 10 is even more disturbing as it comes just months after a Lion Air flight crashed in Java sea killing all 189 passengers onboard in October 2018. Both the Ethiopian Airlines and Lion Air flight used the same model of aircraft models, Boeing 737 Max.
The second crash involving the new model killed 157 passengers from as many as 35 countries. It also raised questions on the safety of the model.
Although the reason behind the latest crash is yet to be ascertained, pilots and investigators have expressed concern over the airplanes’ software system and the potential threat that pilots could face while trying to override the system during an emergency.
According to the Federal Aviation Administration, there are a total of 387 Boeing 737 Max models operating globally, including 74 in the United States.
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