Following the deadly Ethiopian Airways crash at the weekend, nations all over the world have begun to issue a Boeing 737 MAX ban in their airspace. Over the course of today, the 737 MAX ban has spread almost worldwide, as airlines, governments and aviation authorities err on the side of caution until the safety of the aircraft can be proven. When Simple Flying reported yesterday that some airlines were suspending use of the 737 MAX, just a handful of carriers were affected. At the time, we even received statements from numerous operators of the aircraft assuring us of their confidence in the safety of this model. However, just 24 hours later and it’s a very different story. Over the course of today, airline after airline has announced it is grounding the 737 MAX. Then it became national, as entire countries began to ban the use of the MAX in their airspace. China were the first to ban the 737 MAX, taking action yesterday to ensure the safety of travelers in its airspace. Indonesia, Singapore, Malaysia, Australia, Oman and Ireland soon followed suit, along with the United Kingdom. Then came France, Germany, Iceland, Italy and the Netherlands, until finally the EASA announced it would suspend all 737 MAX operations across the entire European continent. Their statement was clear: “As a precautionary measure, EASA has published today an Airworthiness Directive, effective as of 19:00 UTC, suspending all flight operations of all Boeing Model 737-8 MAX and 737-9 MAX airplanes in Europe. In addition, EASA has published a Safety Directive, effective as of 19:00 UTC, suspending all commercial flights performed by third-country operators into, within or out of the EU of the above mentioned models.” Following on from this, India, the UAE and Kuwait went ahead and issued a 737 MAX ban. Individual carriers have also banned the MAX, including Norwegian, Turkish Airlines, Aeromexico, Aerolineas Argentinas, Comair, Eastar Jet, GOL and Cayman Airways. Despite almost the entire world deciding to take matters into their own hands, both Boeing and the FAA refuse to admit there could be a problem, consistently reiterating the safety of the ill-fated aircraft. Why won’t Boeing order a grounding? Initially, Boeing probably baulked at the potential losses they would incur by taking such a popular model out of service. Analysts estimate a grounding of three months would cost the manufacturer in the region of $1bn up to $5bn. But it’s not like Boeing couldn’t afford it; last year their revenue was in excess of $100bn, with a $10.6bn profit margin. If the worldwide grounding was an order from Boeing, the manufacturer would be seen to be taking control of the situation. Their reluctance to admit that there may be an issue with the aircraft has left nations and carriers to take matters into their own hands, a state of affairs that is doing more harm to Boeing’s reputation than a cautious temporary grounding would ever have done. Both Boeing and the FAA seem to be willing to do almost anything to save face. The right time to order a grounding would have been immediately following the Ethiopian Airlines crash. Instead, both the manufacturer and the regulator insisted the aircraft was safe to fly, and now it seems it’s gone so far that they cannot back down without looking stupid. Meanwhile around 100 737 MAX jets continue to crisscross the skies above North America. Operators still flying the jet include WestJet, Air Canada, Southwest Airlines, American Airlines and United. Boeing still maintain that the aircraft is safe, and until the results of the ‘black box’ investigation are concluded, there’s nothing to say it’s not. However, they have also scheduled in an emergency software upgrade by April, which they say is to ‘make a safe plane even safer’. Boeing’s stock has fallen 11% since the accident at the weekend. Growing pressure on the FAA With such widespread action on the 737 MAX ban, the FAA is under increasing pressure to take action in the US. US Senators are calling on the FAA to ground the 737 MAX 8 and 9 until the safe operation is unequivocally confirmed. The FAA should ground all Boeing 737 MAX 8 and 9 aircraft until the agency can conclusively determine that the aircraft can be operated safely. pic.twitter.com/IjExAJJqIx — Ed Markey (@SenMarkey) March 12, 2019 Senator Elizabeth Warren of Massachusetts released a similar statement calling upon the FAA to ground the jet. “The world has now witnessed the second tragic crash of one of these planes in less than six months. While we do not know the causes of these crashes, serious questions have been raised about whether these planes were pressed into service without additional pilot training in order to save money. Today, immediately, the F.A.A. needs to get these planes out of the sky.” Democratic Senator Richard Blumenthal, a member of the Senate Committee on Commerce, Science and Transportation, also commented on the lack of action by the FAA, saying: “My fear is that the FAA is simply trying to save face and avoid acknowledging the safety defect that they failed to find when they certified the plane’s safety,” However, despite these efforts, Mr. Trump remains confident that there is no need for action by the FAA at this stage. Boeing’s CEO, Dennis Muilenburg, spoke with the President earlier today to reassure him that the 737 MAX aircraft is safe. At the time of writing, there is no indication that the FAA are planning to do anything at all to stop the 737 MAX from flying. Why aren’t US carriers voluntarily grounding the 737 MAX? Despite the lack of an FAA directive (or a Boeing issued notice) demanding compulsory grounding, it would seem to make sense to take these aircraft out of service, at least for the time being. However, all North American operators seem to be sticking to the letter of the FAA guidance and refusing to take these aircraft out of service. The 737 MAX is a new enough aircraft that it doesn’t make up a significant portion of these operator’s fleets, for most it’s less than 5% of their overall capacity (for American it’s less than 1%). Although some flight disruption would be likely if these planes were taken offline, undoubtedly passengers and airline staff would be understanding and even grateful that action has been taken. The real problem is that, until all air crash investigations have been completed, there will be no telling if Boeing’s software fix is enough to restore safety in these aircraft. Some analysts have accused airlines and authorities of grounding ‘based on sentiment’, leaving very little room for Boeing or the FAA to justify putting them back in the skies. Ever. With investigations likely to take months, at a minimum, airlines are faced with the prospect of grounding the 737 MAX indefinitely, and that’s not a decision they’ll want to take lightly. Undoubtedly US carriers are under immense pressure from the FAA to continue flying the jet, in order to support their home grown manufacturer as well as their aviation authority. Trouble is, all the while they’re playing with fire, and with real people’s lives.<doc-sep>After a four-day international aviation crisis, the Boeing 737 Max is no longer in the skies. With the black box from Sunday’s Ethiopian Airlines crash now in the hands of authorities, there will be a waiting period until we know the verdict. If a link between October’s Lion Air crash in Indonesia and Sunday’s tragedy is found, it will likely be a while before the 737 Max is deemed fit to fly once again. That raises the question: How will airlines accommodate the thousands of passengers who were booked on flights meant to be serviced by the 371 grounded aircraft? The answer varies—but on the whole, it won’t come cheap for airlines. There will, of course, be some cancellations, especially in the immediate aftermath. But thus far, The Points Guy reports, American airlines who operate the Max (Southwest, American, and United) have been proactive in notifying customers, and rebooking them at minimal inconvenience and no additional cost. Fortunately, the grounding comes at a time when airlines tend to have a bit of breathing room in their fleets, so the likes of Southwest Airlines (which has 34 of the aircraft, which it notes is less than 5% of its total fleet) may be able to service flights with alternative planes. (Had the grounding happened at the height of the midsummer travel period, this might not be the case.) It’s also worth noting that the older variants of 737 (the 737-700s, -800s, and -900s ) are not affected by the grounding, as they don’t have the anti-stall software system in question installed. Another tactic to avoid cancellations is to increase the hours per day an aircraft flies, something Southwest has used in the past. This strategy is suitable for the Max, which generally services short-haul routes that run multiple times per day. Norwegian Air, which has 18 Max 8s in its fleet, announced this week that in addition to “combining flights, relocating aircraft, and booking customers to other departures” it will service its transatlantic Dublin to Stewart, New York route with a spare 787 Dreamliner. The squeeze comes at a tough time for the low-cost, long-haul carrier, which undertook a costly leasing operation throughout last year while it repaired the engines of its Boeing Dreamliners. In a video statement on the airline’s website, CEO Bjørn Kjos said it will be passing the bill for this upset on to Boeing. Speaking of leasing, that’s another option, albeit a costly one. Airlines that have neither slack in their fleet nor the ability to extend aircraft hours can “wet-lease” planes from third-party providers. This involves leasing not just an aircraft, but also crew, insurance, maintenance, and amenities. It also means that passengers who expect a certain seat or entertainment system may be surprised to find an entirely different configuration when they climb on board their flight. One provider, Titan Airways, said it (paywall) had already fielded requests from European airlines this week. Read more of Quartz’s coverage of the Boeing 737 Max crisis.<doc-sep>
Whilst the world reels in tragedy from the 737 MAX 8 disaster, there has been one silver lining. Fares in aviation price-war India have gone up, supplying local companies with much-needed cash revenue to keep flying. What is the situation in India? Aviation in India is facing some problems. It’s a huge market with clear opportunity, but the majority of the population can not afford air travel (this is a generalization). As such, the train network is very robust and, next to China and Europe, is one of the best in the world (you can go anywhere on trains). So, airlines have to find a way to compete with a poorer population that already has a great alternative on the ground. Whilst at the same time fending off competition from airlines outside of the country. Thus, tickets in India are being sold for as little as two cents! The airlines are so cutthroat with each other that they offer practically free airfares to get customers onto their flights. How does banning the 737 MAX 8 change things? Because the 737 MAX has been banned from flying anywhere in the world, many airlines that heavily utilize the aircraft have found themselves with a capacity shortfall. If an airline was currently in a price war with another airline, and have their capacity banned, they would have to charge more for the limited seats they had left. This capacity vacuum in the market will quickly cause prices to accelerate back up and beyond previous levels. Such is the case in India. Due to the banning of the 737 MAX, 14 different major domestic routes in India have seen prices increase up to 65% (since last year). One route actually increased by 50% in two days since the news was announced (from 8,000 rupees to 12,000 rupees). “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” Much of this is fueled by SpiceJet. They operate 12 737 MAX aircraft, which are now no longer able to fly. This has reduced their 737 fleet by 25%. SpiceJet has another 193 MAX 8 aircraft on order from Boeing. Jet Airways (pictured above) has five Boeing 737 MAX 8 grounded. They also have 142 on order as well as 72 737 MAX 9. Less capacity on routes means airlines have little option than to increase prices to make up for the shortfall. As such, passengers used to paying only a few dollars now face parting with a month’s wages to fly anywhere. It is a problem as well if these people are using aircraft as essential transport (seeing family, health or work). “With the current increase in load factors and this reduction in capacity, we expect airfares to rise further in the short to medium term.” The DGCA has asked airlines to not engage in any profitable fare increases during this time. What do you think? Is this good for India in the long term?