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Boeing 737 Max re-entry to Indian skies is further delayed. But SpiceJet is not worried

The latest glitch in the troubled flight of Boeing’s most-sold aircraft means that SpiceJet, the only Indian airline that uses Max 737, will have to keep 13 of its planes mothballed. This may not be bad news as it will get compensation from the Boeing at a time when it may not need to fly them as the second wave of the pandemic has hit air travel.

April 12, 2021 / 01:50 PM IST
A Boeing 737 MAX  aircraft. | Representative Image

A Boeing 737 MAX aircraft. | Representative Image

Barely five months after major airlines resumed flying Boeing Max 737 aircraft that were grounded for almost two years, the popular airplane that cay fly up to 7,000 km has hit another air pocket.

This was not expected. Just a few days ago Boeing's senior management told Indian media that the aircraft had gone through a rigorous check of 4 lakh engineering hours, 1,400 test flights and 3,000 flight hours before it took off again after being grounded for 20 months following fatal accidents that killed 346 people,

The return looked like a success, with regulatory approvals coming from major markets, including Europe, the US and Australia. Twenty airlines had brought it back to service, and 182 of these planes were in service.

But on April 9, quite a few of these airlines grounded many of their 737 Max aircraft after Boeing warned of a new fault. About 16 airlines and nearly 100 aircraft are effected.

Is it the same problem that led to the earlier grounding?

Close

It isn't. This time the problem is an electrical one, and gives a backup to the main power system.  This is different from the software problem that led to the twin fatal crashes. Ironically, the new issue has cropped up in those planes that were produced after the checks and changes in the system.

Which airlines have been impacted?

The three biggest American airlines that use the aircraft, American Airlines, Southwest Airlines and United Airlines, have been forced to pull some of their 737 Max out of service. On the other hand, Flydubai, the low-cost airline that had resumed using the aircraft only on April 8, said it is not impacted.

Didn't Flydubai want to bring the 737 Max to India?

Indeed. It had asked Indian aviation regulator, the DGCA, for approval. But senior executives told Moneycontrol that the request has been turned down.

"We will need some more time to gauge the performance of the aircraft and therefore, it has been denied for the time being," a senior executive said.

What does all this mean for SpiceJet? Doesn't it have 737 Max in its fleet?

The airline does. It has 13 of these planes, all of which remain grounded. The executive quoted above said the 'situation is similar for SpiceJet.' In other words, more time is needed to decide on getting these aircraft back to service.

Is it a good or bad thing?

Last year, SpiceJet had said it was hoping to start operating the 737 Max from the first quarter of 2021. That timeline is now past. But that necessarily may not be that bad for the airline.

Why so?

Two reasons. SpiceJet gets compensation from Boeing for the duration these planes are grounded. Till now it has adjusted claims of over Rs 1,000 crore from Boeing, on its books. This number would have increased, as would be seen when the airline announced its fourth quarter results.

Second, air passenger traffic in India hasn't yet revived to pre-COVID-19 levels. In fact, the second wave of the pandemic has created a huge dent in the recovery with bookings already down by at least 15 percent. There are reports of passenger loads already going below 60 percent on many routes.

In such circumstances, SpiceJet may not need to bring back all its aircraft, including the 737 Max, to service.

And now, with the new issue cropping up with these aircraft, the wait could be longer. Just that, the airline won't be missing it, as yet.
Prince Mathews Thomas heads the corporate bureau of Moneycontrol. He has been covering the business world for 16 years, having worked in The Hindu Business Line, Forbes India, Dow Jones Newswires, The Economic Times, Business Standard and The Week. A Chevening scholar, Prince has also authored The Consolidators, a book on second generation entrepreneurs.
first published: Apr 12, 2021 01:50 pm

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