MAX grounding could spark a hike in airfare

dubai — Airfares are expected to go up in coming weeks due to the grounding of hundreds of Boeing 737 MAX 8 aircraft after the crash of an Ethiopian Airlines plane near Adis Ababa earlier this week.

Due to the grounding of nearly 400 737 MAX 8 planes, the seating capacity of airlines has declined. Some bigger airlines will manage to increase frequencies but many smaller and mediumsized carriers will have to cancel their flights, depending on the fleet that they operate.

Fares will increase in those countries where the airlines were largely operating 737 MAX 8 fleet.

Saj Ahmad, chief analyst at StrategicAero Research, says there may be one or two routes where frequencies may have to be reduced to effectively schedule flights that could result in a minor fare hike.

He noted that airlines will not want to raise fares to the point where they alienate their customer base. “I don’t see fares rising across the board.”

Yasir Wisal, general manager, Al Masa Tours, said airfares could go up in those countries where a large fleet consists of 737 MAX.

“Those airlines which will not have aircraft other than 737 MAX 8, will face severe capacity constraints. So they will have to cancel flights and rent new aircraft, resulting in a spike in airfares in those markets,” he said.

Wisal said Africa, China and Malaysian markets could be more affected than other markets in the world.

More than a dozen countries — including the UAE, Oman and Kuwait –— have asked their airlines to ground Boeing’s 737 MAX 8. Dubai’s low-cost carrier flydubai said its fleet of 13 Boeing 737 MAX 8 and MAX 9 aircraft has been grounded.

“With regards to flight cancellations, flydubai will cancel up to 15 flights a day. The flydubai team is working hard to minimise disruption to its passengers. Flydubai is directly contacting passengers who are affected. The airline continues to provide regular updates on Facebook and flydubai.com,” the carrier said in a statement on Wednesday.

Similarly, India’s SpiceJet said it cancelled 14 flights on Wednesday and will be operating additional flights today. Of the 76 planes in its fleet, 64 aircraft are in operations.

Lakshmi Anand, operation manager, International Travel Services, said the UAE, India and authorities from other countries have cancelled operations of 737 MAX, therefore, the airlines will accommodate some in additional flights, while others are likely to get a refund.

“The booked passengers may not find any difference in the airfare while accommodating in other carriers or additional flights since the cost difference would be borne by the airlines. If the passenger chooses to cancel the booking on their own, they may face charges. Also the new bookers may find a hike in the fares for certain period based on the travel seasonality,” she said. Saj Ahmad believes capacity of the airlines will not be impacted as much as feared as airlines can still cycle in and schedule existing airplanes in their network.