Skift Take

SpiceJet is hurting the most, after investing heavily in the aircraft. What will this mean for India's rapidly growing airline industry?

Average airfares in India soared after the nation joined others in grounding Boeing Co.’s 737 Max jets, shrinking capacity in the world’s fastest-growing aviation market, where carriers have traditionally lured first-time flyers with ultra-cheap fares.

Average fares on 14 main routes jumped more than 65 percent on Thursday, compared with a year ago, data from online travel agent showed. In contrast, fares on average were up just about 30 percent on Feb. 12, when India was yet to decide on grounding the Boeing jets, the data showed.

Tickets from the technology hub of Bengaluru to the financial capital of Mumbai — a distance of just over 500 miles — were selling for 12,748 rupees ($180) on Thursday, compared with 8,643 rupees two days ago, according to Yatra.

Global regulators from China to the U.S. have grounded the best-selling Boeing plane after a 737 Max jet flown by Ethiopian Airlines Group crashed minutes after take off, five months after a Lion Air jet of the same type plunged off the coast of Indonesia. More than a quarter of Indian budget carrier SpiceJet Ltd.’s narrow body fleet was idled after the ban. SpiceJet is one the biggest customers for Boeing with as many as 205 of the Max jets on order.

“The DGCA’s decision to ground 737 Max aircraft has resulted in a fairly significant impact on the airfares for immediate travel on certain key routes,” said Sharat Dhall, chief operating officer of the business-to-consumer segment at Yatra Online Pvt. “With current increase in load factors and this reduction in capacity, we expect airfares to rise further in the short to medium term.”

India’s Directorate General of Civil Aviation, the regulator, has asked airlines to keep fares at regular levels, and all airlines agreed not to indulge in “predatory pricing,” B.S. Bhullar, the head of the agency said on Wednesday.

©2019 Bloomberg L.P.

This article was written by Anurag Kotoky from Bloomberg and was legally licensed through the NewsCred publisher network. Please direct all licensing questions to [email protected]

November 16, 2022
Dallas-Fort Worth, TX and Online
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Tags: Boeing, Boeing 737, india, spicejet

Photo credit: A Boeing Co. 737 aircraft operated by SpiceJet Ltd. approaches to land at Chhatrapati Shivaji International Airport in Mumbai, India. Dhiraj Singh / Bloomberg