Boeing 737 Max 8 woes crimp Asian airlines’ growth plans

By Annabelle Liang / Associated Press

SINGAPORE — Asian airlines are cutting routes, revamping their schedules and leasing extra aircraft to fill gaps left by the grounding of Boeing 737 Max 8s after deadly crashes in Indonesia and Ethiopia killed 346 people.

So far, regional carriers have managed to avoid major disruptions, but analysts expect that idling the Max 8s, a fuel-efficient update of Boeing’s popular 737, will crimp growth plans in the near future.

As investigations into the crashes continue, Boeing anticipates a $1 billion increase in costs related to the 737 Max, including fixing software implicated in the disasters, adding pilot training and compensating airlines and families of crash victims. Investigators are examining the role of flight-control software that pushed the planes’ noses down based on faulty sensor readings.

Nearly 400 Max jets were grounded at airlines worldwide in mid-March after the Ethiopia crash.

In Asia, where air passenger traffic is growing the fastest, the groundings are pushing airlines’ costs higher at a time of rising fuel prices, squeezing carriers’ profits.

Chinese airlines had 96 Max 8 jets but have managed to avoid massive cancellations by swapping in other models of aircraft, said Kelvin Lau of Daiwa Capital Markets in Hong Kong.

“However, this may limit their capacity growth for the coming peak season,” he added.

China Southern Airlines, which has 25 Max 8 jets, will likely revise its targeted growth for passenger capacity, he said.

Indonesian carrier Lion Air, whose Flight 610 disappeared into the sea shortly after takeoff from Jakarta, killing 189 people, said Friday in a statement that it was “operating normally by minimizing the impact” from the grounding of its 10 Max 8 jets.

“Lion Air continues to serve routes that have been operated by Boeing 737 MAX 8 by replacing them using other Lion Air fleets,” spokesman Danang Mandala Prihantoro said in a statement.

India’s SpiceJet has said it would lease 22 Boeing 737-800NG aircraft, nine of which are already in service. The carrier said it also will deploy five Bombardier Q400 aircraft.

“The new inductions will not just bring down flight cancellations to nil but also help in SpiceJet’s aggressive international and domestic expansion plans,” chairman and managing director Ajay Singh said in a statement.

Not all carriers, even those without Max 8s, have managed as well.

Budget carrier Scoot, which is owned by Singapore Airlines, announced that it would suspend services between Singapore and four cities, with the first suspension starting from June. The routes were served by the Airbus A320.

Scoot, which does not have any Max 8 jets, said in a statement that the cuts were “due to a combination of weak demand and a shortage of aircraft resources.”

“The aircraft shortage is arising as SilkAir, due to the grounding of its Boeing 737 MAX 8 fleet, will no longer transfer its Boeing 737-800NG aircraft to Scoot in the financial year 2019/2020,” it said.

SilkAir, the regional arm of Singapore Airlines, withdrew its six Max 8 jets from service on March 12, and its parent carrier has reassessed its capacity and fleet, opting to have Scoot grow more slowly, said Brendan Sobie of aviation consultancy CAPA.

Boeing CEO Dennis Muilenburg recently said the company was nearly finished an update to the Max that “will make the airplane even safer.”

But given the concerns that deepened with the crash of an Ethiopian Airlines Max 8 on March 10, it’s unclear when the update will be deployed and how long it will take for aviation regulators and airlines to decide it’s safe for the aircraft to resume operations.

That’s a hardship for carriers, especially during the peak summer travel season.

“Airlines don’t know exactly when the Max will be back in service. This makes it a little difficult to plan, even though there is some flexibility within their fleets,” Sobie said.