Fares Skyrocket in Fastest-Growing Market on Boeing 737 Max Ban

Average airfares soared after the country joined others in grounding Boeing 737 Max jets, shrinking capacity in the world's fastest-growing aviation market, where carriers have traditionally lured first-time flyers with ultra-cheap fares.

Average fares on 14 main routes jumped more than 65 per cent on Thursday, compared with a year ago, data from online travel agent Yatra.com showed. In contrast, fares on average were up just about 30 per cent on February 12, when the country was yet to decide on grounding the Boeing jets, the data showed.

Tickets from the technology hub of Bengaluru to the financial capital of Mumbai -- a distance of just over 500 miles -- were selling for Rs 12,748 ($180) on Thursday, compared with Rs 8,643 two days ago, according to Yatra.

Global regulators from China to the US have grounded the best-selling Boeing plane after a 737 Max jet flown by Ethiopian Airlines Group crashed minutes after take off, five months after a Lion Air jet of the same type plunged off the coast of Indonesia. More than a quarter of domestic budget carrier SpiceJet's narrow body fleet was idled after the ban. SpiceJet is one the biggest customers for Boeing with as many as 205 of the Max jets on order.

"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," said Sharat Dhall, chief operating officer of the business-to-consumer segment at Yatra Online. "With current increase in load factors and this reduction in capacity, we expect airfares to rise further in the short to medium term."

Directorate General of Civil Aviation (DGCA), the regulator, has asked airlines to keep fares at regular levels, and all airlines agreed not to indulge in "predatory pricing," BS Bhullar, the head of the agency said on Wednesday.