A SpiceJet Ltd. aircraft stands on the tarmac at Chhatrapati Shivaji International Airport (Photographer: Dhiraj Singh/Bloomberg)

A Pile-Up of Grounded Planes May Drive Indian Airfares Up 20%

(Bloomberg) -- A pilot shortage for one. A cash crunch for another. And now the Boeing Max crisis. As Indian airlines ground plane after plane, passengers can expect to pay a lot more.

Airfares for domestic travel may rise by 20 percent heading into the annual school break, a prime time for families to travel, according to an online booking firm. “At least 50 planes are out of action owing to multiple reasons,” said Sharat Dhall, chief operating officer of the business-to-consumer segment at Yatra Online Pvt Ltd. “That’s an eight percent reduction of domestic airline capacity.”

Clipped Wings

  • Jet Airways India Ltd. has grounded about 40 percent of its fleet after failing to pay lessors as it races to fix its debt woes.
  • Budget airline SpiceJet Ltd. said Wednesday that it was pulling 12 Boeing 737 Max planes from service after India joined other nations in shutting its skies to the tainted aircraft at the center of two recent crashes.
  • Asia’s biggest low-cost airline by market value, IndiGo, will be canceling dozens of flights everyday over the next two months as it battles a shortage of skilled pilots following an aggressive expansion.

Meanwhile, Indians just keep flying more. The sector recorded 46 straight months of double-digit growth through to June 2018, according to International Air Transport Association, keeping it on course to becoming the third-largest domestic aviation market by 2024.

With robust demand through the holiday season, Dhall says airfares have only way to go: Up.

©2019 Bloomberg L.P.