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Boeing 737 MAX 8 ban: Biggest setback for the US-based aircraft manufacturer in its history

The DGCA issued grounding orders for Boeing 737 MAX 8 early this week. SpiceJet and Jet Airways have just 18 of them, of which five were already grounded by Jet due to its financial troubles.

Boeing 737 MAX 8 ban: Biggest setback for the US-based aircraft manufacturer in its history

Boeing 737 MAX 8 ban: Biggest setback for the US-based aircraft manufacturer in its history

The global ban on the controversial Boeing 737 MAX 8 has rattled the airline operators. Not only due to the amount of such aircraft that have suddenly gone out of service but also the delay in future deliveries by Boeing - until the current issues are fixed - would significantly impact their future capacity additions, and hence growth projections.

Let's look at the global scenario first. The FAA (Federal Aviation Administration), the US nodal agency for aviation, while issuing the airworthiness notice to airlines globally, mentioned that the worldwide fleet of 737 MAX 8 and MAX 9 is 387 planes, which are operated by 59 operators. When compared with the size of the active global commercial fleet (about 26,307), the 737 MAX 8 and MAX 9 fleet constitute just 1.47 per cent.

The scenario, however, changes completely if the pending aircraft orders are taken into consideration. For instance, 737 MAX series accounts for over 35 per cent (4,636 aircraft) of the total pending aircraft orders with Boeing and Airbus (13,216). That means that one in three planes to be inducted into the global commercial aviation fleet is going to be 737 MAX given that Boeing could effectively find a solution.

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In India, the situation is no different. When the DGCA (Directorate General of Civil Aviation) issued the grounding orders for this narrow-body aircraft early this week, Indian airlines-SpiceJet and Jet Airways-had just 18 of them, and out of which five were already grounded by Jet due to its financial troubles. For domestic commercial aircraft fleet of 638, the current groundings might not have a significant impact. But the pending orders of 430 737 MAXs-out of the total 1,008 orders for the entire sector-could affect the growth projections for airlines like SpiceJet and Jet. Though SpiceJet's 205 planes order also includes 50 aircraft, the airline has the option to convert into a firm order later.

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For Boeing, this is the biggest setback for the US-based aircraft manufacturer in its entire history. The overwhelming dependence on this single-aisle aircraft-4,636 737 MAX out of the total backlog of 5,826 aircraft-can seriously jeopardise its financials, and the company is under immense pressure to fix the problems that seems to be three-fold.

Experts believe that 737 MAX is not a product that was well thought-through. Back in 2010, when Airbus launched its next-generation, fuel-efficient A320neo, Boeing was already looking for a replacement to its five-decade old 737 series of aircraft. The runaway success of A320neo prompted Boeing to put out a competitor in the market in the shortest possible time. In 2011, the 737 MAX was launched with new features such as new CFM International LEAP-1B engine but it seems that the company had to make compromises while overhauling its 737NG series in order to quickly react to the Airbus' move. At the moment, 737 MAX is the fastest-selling airplane in Boeing history, and has more than 100 customers. The MAX family has four types - 737-7, 737-8, 737-9 and 737-10 - that comes in different seating capacity.

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While the investigations of the Ethiopian Airlines crash are still being conducted, there are already enough evidences that link the current crash with the last year's Lion Air tragedy involving the same aircraft. It's believed that the placement and the size of the engines, faulty anti-stall systems, and inadequate communications from the Boeing to the pilots about the functioning of this aircraft are the main culprits. It's normal for a new aircraft type to develop technical glitches in the first few years of its launch. Given that 737 MAX was commercially launched less than two years ago, the Lion Air's crash was clearly a distress signal that the Boeing and global aviation regulators failed to take note of.

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