The Fare Factor: Post-Grounding Of All Boeing 737 Max Aircraft, Ticket Rates See Massive Spike, May Normalise Soon

Recent incidents involving Boeing 737 MAX planes have forced airlines to ground their aircraft over safety concerns. The airlines, which are already deep in trouble over various reasons, have spiked domestic airfares by 35-40 per cent in key sector markets as a result of fewer aircraft, reports Hindustan Times.

The crash of the Boeing 737 MAX in Ethiopia resulted in the grounding of all new-generation Boeing aircraft across the world, followed by Indian airlines such as SpiceJet, Indigo and Jet Airways. SpiceJet grounded 12 aircraft and had to cancel 30 flights a day while Jet Airways grounded 41 aircraft followed by IndiGo with 30 flights per day.

“February and March have seen high airfares, with an average increase of 35-40 per cent on airfares across key sectors. The partial closure of Mumbai and Bengaluru airports and daily cancellations and grounding of planes by airlines led to a 5 per cent decrease in seat capacity,” Aloke Bajpai, CEO and co-founder of ixigo, a travel website, told HT.

During the worst of the crisis, a last-minute ticket to Pune from Delhi was seen as costing around ₹35,000-40,000. It normally costs around ₹7,000.

That resulted in a sharp increase in fares — by 40-50 per cent for same-day fares and, in some cases, up to 200 per cent for last-minute fares, according to airline executives. That is expected to change now. “With Jet announcing operations of 75 planes by next month and airlines tackling pilot shortage issues, airfares are expected to normalise soon. Our data shows that if grounded planes resume operations, airfares can dip by 15-20 per cent April onwards,” added Bajpai.

However, industry experts predict a considerable fall in prices and a return to normalcy as all major airlines are resuming their operations.

“Airfares are expected to come down given that constraints on the supply side will ease out with deployment of additional aircraft by airlines, as also the reopening of the runway in April, leading to an eventual stabilisation of both domestic and international schedules,” said Indiver Rastogi, president and country head, corporate travel, Thomas Cook India Ltd.

Executives at IndiGo and SpiceJet confirmed that the number of flight cancellations will go down from April 1, leading to more seat availability and a reduction in fares.

Jet Airways, which is in a financial slump of ₹8000 crore debt is also expected to resume operations. Its executives said operations to Bhuj, Mangalore, Bhopal and Aurangabad will resume from March 31 while the frequency of flights to metro cities will also increase.