With 114 planes out of a fleet of 585 grounded, spot fares to rise by up to 25% in the short term.
With the grounding of 12 Boeing737MAX aircraft, all belonging to SpiceJet, by the Directorate General of Civil Aviation Wednesday onwards, Indian skies have now gone short of 114 planes of its total fleet size of 585, which is sure to push up spot fares by up to 25% in the short term. Further, since lifting of the ban will not happen soon and financial problems in Jet Airways dragging, capacity shortage is there to stay leading to a long-term pain as well.
While the latest grounding is due to the recent crash of a 737 MAX of Ethiopian Airlines, even earlier carriers like IndiGo, GoAir, Jet Airways and Air India had grounded a number of their aircraft due to one reason or the other, ranging from financial constraints to technical problems to shortage of pilots. For instance, around 50% of Jet’s fleet is grounded due to non-payment to lessors and IndiGo has been cancelling around 30 flights everyday due to shortage of pilots. Another carrier GoAir has about 14 of its 47 aircraft grounded due to lack of network to fly to or due to the Pratt & Whitney engine issue.
Though civil aviation secretary,PS Kharola, after holding a meeting with the operators on Wednesday evening, said that the airlines have agreed to not indulge in predatory pricing, travel operators were not convinced. Kharola said SpiceJet will adjust most passengers in its own flights and if the need arises, other operators will pitch in.
“The fares have already gone up by 15% (year-on-year) since the beginning of the year. If you put the total capacity being taken out from the market in conjunction with the high load factor of about 80-90% there is no way the airlines can absorb this short-term excess capacity deficit and an increase in fares is therefore imminent,” said Sharat Dhall, chief operating officer, Yatra Online, an online travel search engine and booking agency.
Kapil Kaul, South Asia, CEO of aviation consulting firm, Centre for Asia Pacific Aviation (CAPA), said the industry could witness significant drop in the capacity in the coming months if the ongoing woes persist. “Total of MAX fleet is insignificant to the fleet of narrow body we have. But if you couple it with the MAX induction that SpiceJet was to get in next one year, significant capacity reduction by Jet, pilot-related challenges at IndiGo, there will be a capacity shortage. There is a concern,” Kaul explained.
On its part SpiceJet, which cancelled 14 flights on Wednesday, sought to assuage any concerns on shortage of flights or inconvenience to passengers.
In a statement on Wednesday, the airline said, “SpiceJet has presently announced cancellation of 14 flights for today (Wednesday) and will be operating additional flights from tomorrow (Thursday). Of the 76 planes in our fleet, 64 aircraft are in operations and we are confident of minimising the inconvenience to our passengers and attain normalcy in our operations.”
It said that it is rationalising and optimising the use of its Boeing 737 NG and Bombardier Q400 aircraft to address the current situation and minimise inconvenience to its passengers. “We are evaluating options for augmenting capacity in the coming days through a mix of additional flights and aircraft inductions. We are sure that our operations will be normal very soon,” the airline added.
The grounding of MAX and uncertainty on the ban being lifted has also put a question mark on SpiceJet’s expansion plans. The carrier has 155 of this aircraft on order and was looking to grow its operations on this. It had plans to add 20 aircraft by the end of 2019, majority of them being MAX.