Grounding Boeing 737 Max could have financial implications for airlines - expert

Several airlines, including Comair in South Africa, have grounded Boeing 737 Max 8 jets following a deadly Ethiopian Airlines crash that killed 157 people.

It is currently not clear for how long these airlines will be grounded, but the Indonesian Transport Ministry has stated that the model will remain grounded until it is cleared by safety regulators.

The US federal aviation administration has declined to order airlines to ground the Boeing 737 Max 8 jets.

But how will a decision to ground these planes affect the operations of these airlines?

Airline consultant, Hein Kaiser says at this point, airlines are voluntarily grounding the planes to protect their reputation and to ensure consumer confidence after a tragic incident.

Read: Boeings grounded, as search continues for Ethiopian Airline black box

From a reputational point of view, I think it is a very good thing but from a commercial perspective, the picture might not be that good.

Hein Kaiser, Airline consultant

If you think about the cost of ownership, cost of operation and the potential revenue loss that you might have if you don't have a fleet, you might potentially have to condense your schedule. this might have very real commercial opportunity costs.

Hein Kaiser, Airline consultant

It certainly comes with very substantial financial implications.

Hein Kaiser, Airline consultant

Unfortunately, insurance does not cover decisions to ground flights, meaning this is a financial loss that airlines would have to bear, says Kaiser.

Commenting on the US decision, Kaiser the US could be avoiding making decisions that would potentially scare consumers.

To hear the rest of the conversation, listen below:


This article first appeared on 702 : Grounding Boeing 737 Max could have financial implications for airlines - expert


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