Spot airfares rise by over 49% after DGCA grounds all Boeing 737 MAX 8 aircraft

This was the second fatal accident in a Boeing 737 MAX, the fastest-selling model in Boeing's history, in just under five months.

As per the spot rates, there has been a significant rise in routes such as  Mumbai-Hyderabad, Mumbai-Delhi and Delhi-Kolkata. The data shows that there has been a rise of 189.60 percent, 37.06 percent and 67.45 percent in these three routes, respectively. Apart from the spot airfares, there has been a total rise of 15-20 percent in the airfares.

A Bengaluru-Mumbai flight for today's travel is showing a 272 percent higher air fare at Rs 12,748 rupees as compared to Rs 3,428 the same time a year ago.

The rise in the airfares is compared between March 15, 2018 and  March 15, 2019 by the travel website.

The unusually high air fares are also the result of several other disturbances in the aviation space across airlines and airports. The primary factor is the runway closure at the Chhatrapati Shivaji International airport of Mumbai from 11 am to 5 pm for three days every week for maintenance and repair work, leading to capped flight movements.

As the airport has two cross runways, there is only one operational runway at a time and hence, the primary runway (09/27) handles maximum flight operations. In total, the airport handles around 50 flights and hence, more flights will be affected as the maintenance work shall continue till March 30.

Air tickets bought for immediate travel and the price paid for the ticket is termed as spot airfares.

"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. While the overall fares were already on the rise by 15-20 percent, we have noticed a variable pattern in spot fares with spike in fares on routes such as Mumbai-Hyderabad, Mumbai-Delhi and Delhi-Kolkata. With current increase in load factors, this reduction in capacity we expect to airfares to rise further in the short to medium term.” Sharat Dhall, COO (B2C) Yatra.com, said in a statement.

The spot airfares, not only for the three routes mentioned above, has seen a significant rise. Bengaluru-Delhi, Delhi-Bengaluru, Hyderabad-Delhi and Mumbai-Calcutta saw a rise of 75.99 percent, 49.20 percent, 37.79 percent and 92.23 percent, respectively.

"The number of Boeing 737 MAX 8 operating in India currently are 12-13 and that’s only with SpiceJet. Jet Airways has already grounded the Max planes because of funding challenges. The current suspension is not expected to impact operations significantly," Kaul had told CNBC-TV18 on Wednesday.

However, SpiceJet's fleet dipped by 30 percent after the DGCA order, causing an imbalance in the supply of the availability in aircraft and demand for passenger travel. The grounding of Jet Airways flights had already caused a rise in the airfares.

Jet Airways has been dealing with a severe financial crisis since several months now, with a massive debt burden, over 50 grounded planes, practically just 61 out of its 119-plane fleet is flying. Hence, capacity has greatly reduced and air fares are not likely to come down at least till April.

The secondary factor concerns the operational issues of IndiGo and Jet Airways, the two carriers with around 55 percent total market share. IndiGo has been dealing with the shortage of pilots since last month and has been cancelling almost 30 flights on a daily basis. This is expected to continue till March 30.

The safety issues concerning the Boeing 737 MAX 8 comes after it was involved in two deadly plane crashes — Ethiopian Air Crash and Lion Air Crash — in less than five months.

The Ethiopian air crash sparked global tensions and it has also led to the aircraft maker, Boeing, to recommend a temporary suspension of the entire global fleet of the MAX 8 aircraft.