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Business News/ Companies / News/  Two years on, aviation regulator lifts ban on Boeing 737 Max jets

Two years on, aviation regulator lifts ban on Boeing 737 Max jets

Budget airline SpiceJet, the only Indian operator of 737 Max planes, had a fleet of 13 Max jets when DGCA grounded the fleet

A file photo of a Boeing 737 MAX airplane during a test flight at Boeing Field in Seattle, Washington, US (Photo: Reuters)Premium
A file photo of a Boeing 737 MAX airplane during a test flight at Boeing Field in Seattle, Washington, US (Photo: Reuters)

NEW DELHI:Indian airlines, including SpiceJet Ltd, will be able to resume flights of Boeing Co. 737 Max jetliners after the country’s civil regulator lifted a more than two-year-old ban on operating the aircraft.

The order from the Directorate General of Civil Aviation (DGCA) on Thursday will allow carriers to fly the 737-8 and 737-9 planes after fulfilling certain requirements.

DGCA imposed the ban on 737 Max flights in March 2019, joining similar moves by regulators in other countries, after two fatal crashes involving the plane—Lion Air Flight 610 in October 2018 and Ethiopian Airlines Flight 302 in March 2019.

Earlier this year, regulators at most major aviation markets, including the US and European Union, allowed the 737 Max to fly again after extensive fixes. China has, however, chosen to continue its ban on the aircraft.

Budget airline SpiceJet is currently the only Indian operator of 737 Max planes. Earlier on Thursday, the Gurugram-based airline said it has entered into a settlement pact with Avolon, a major lessor of Max planes, paving the way for the airline’s 737 Max aircraft to return to service. The airline said it hopes to operate the aircraft from next month.

SpiceJet, which had a fleet of 13 Max planes when DGCA grounded the fleet, has in the past two years claimed more than 1,200 crore as compensation from Boeing. The company has shown this as other income in its financials. This prompted aviation industry experts to argue that recognising such compensation, which the company has yet to receive as cash, is debatable and that such compensation also requires sophisticated structuring and negotiation.

“SpiceJet seems to be prepared, and we may see the return of grounded Max over the next few weeks," said Kapil Kaul, chief executive officer-Indian subcontinent and the Middle East at aviation industry consultancy CAPA.

“The return of 737Max is good for SpiceJet. (Its) return to service was delayed because of SpiceJet’s internal reasons and not because of the regulator (DGCA)," Kaul said.

Jet Airways, which has been grounded since April 2019, is the other Indian airline that had Boeing 737 Max planes on its fleet. Those planes have, however, been repossessed by the airline’s lessors.

After nearly two years, the National Company Law Tribunal (NCLT) approved in June a resolution plan submitted by Kalrock Capital and UAE-based entrepreneur Murarilal Jalan to revive Jet. The new promoters said they hope to restart operations with Boeing and Airbus planes but are still to specify their preferred aircraft type.

Akasa, a new Indian airline backed by billionaire investor Rakesh Jhunjhunwala, is also in advanced talks with Boeing for as many as 80 Max jets, and the US planemaker is likely to offer steeper-than-usual discounts, Bloomberg News reported recently.

The 737 Max is considered more fuel-efficient than its predecessors and can be used to service short-to-medium-haul routes. The narrow-body aircraft is in competition with Airbus’s popular A320neo series, used by IndiGo, GoAir (GoFirst), Vistara, AirAsia India and Air India.

“I am delighted to share that our 737 MAXs will be back in the air soon. As India emerges from covid and air traffic picks up again, the MAX aircraft will play a major role in our future expansion," SpiceJet chairman and managing director Ajay Singh said, according to a company statement.

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Rhik Kundu
Rhik writes about the Indian economy and its crucial indicators. He is constantly navigating corporates, decoding policies, and dabbling with everything in between.
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Published: 26 Aug 2021, 07:00 PM IST
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