How the Return of the Boeing 737 Max Could Make Airfare Prices Drop
When the Boeing 737 MAX returns to airspaces (predicted later this year), it could trigger a drastic fall in airfare, analysts say.
The jet has been grounded since March, after it was involved in two fatal crashes within five months. It is believed that the aircraft will resume service at some point later this year, although it has yet to be confirmed.
U.S. airlines have a total of more than 6,100 planes across their fleets. There are about 115 MAX jets that were taken out of existing fleets during the grounding, accounting for about two percent of all total commercial planes in the country, according to Barron’s.
When the grounding lifts, Boeing will also be able to deliver a backlog of the aircraft it has produced. Boeing could deliver 82 MAX planes later this year, about 70 percent of the number that are currently already in fleets. This would drastically increase the number of planes (and seat capacity) available to airlines around the country.
“We believe 2020 capacity from the publicly traded U.S. airlines will increase 5.6% versus 3.0% in 2019,” Helane Becker, an analyst at the Wall Street brokerage Cowen, wrote in a report released on Wednesday. “In an environment of significant capacity growth and a waning global economy, we suspect fares will fall.”
But don’t go buying your airfare just yet. With the return date of the aircraft still yet to be determined, it is unclear how long airlines will continue operating with reduced capacity, which could cause price fluctuation.