We are nearing the one year anniversary of the Boeing 737 MAX’s worldwide grounding. Over the course of that year, we’ve reported on numerous airlines having to postpone retirement of older jets, delay new routes, and limit capacity of existing services. But now, roughly fifty days into the coronavirus outbreak, airlines are facing different capacity and fleet challenges as travel demand has dropped in certain parts of the world. How does the coronavirus outbreak affect Boeing’s MAX crisis? Let’s find out.
Suspension in services
Airlines in China, as well as within the greater east and southeast Asian region, have been disproportionately impacted by the coronavirus. All Chinese airlines have had to cut services due to falling demand and travel restrictions imposed to limit the spread of the virus.
Outside of China, we’ve reported on airlines like Starlux, delaying the start of new routes, and Cathay Pacific suspending many of its international routes and certain services to Mainland China. If that’s not bad enough, airlines on the other side of the world have suspended their long-haul services to China and Hong Kong as well. This includes airlines in Europe, the Middle East, and North America.
A surplus of capacity
With such a widespread reduction in flights, there isn’t enough demand elsewhere to keep all of these aircraft flying revenue services. Some airlines say that they will be using this situation to perform more serious maintenance on their aircraft while some aircraft will simply sit in storage.
Vietnam Airlines, however, may be doing something different. The airline has announced it will be putting some of its aircraft up for lease. The Vietnamese carrier says that it will be leasing either its Airbus A321s, its Airbus A350-900s and/or its Boeing 787-9/10s.
While reasons for the leasing have not been confirmed, it’s suspected the coronavirus outbreak is a factor. With Vietnam’s close proximity to China and its strong trade and tourism relationship with the country, the airline recently reported that it’s losing US$10.8m a week in revenue due to the virus. With the cancellations completely out of airlines’ control, any way to earn additional revenue will come as a small consolation.
How the MAX comes in to play
With the coronavirus outbreak leading to the swell of flight suspensions and a surplus of capacity – we would expect that certain airlines once relying on the 737 MAX’s swift return to service, no longer need that additional capacity – at least not right now.
Airlines that would see the biggest interplay of the two factors would be Chinese and other Asian carriers with 737 MAX orders. Depending on their respective order sizes and delivery schedules, this would include the following carriers:
- Air China
- China Southern
- China Eastern
- Donghai Airlines
- Hainan Airlines
- Korean Air
- Lion Air
- Malaysian Airlines
- and Xiamen Airlines
As the 737 can act as both a regional jet and a long-distance-short-haul aircraft, many of the airlines relying on the MAX to perform these flights now no longer have those needs.
Airlines further away
And then there are the airlines further away from China and Asia. There are numerous MAX customers that fly long-haul services to Asia that have had to suspend routes or reduce capacity. This would include airlines such as:
- Air Canada
- American Airlines
- LOT Polish Air
- United Airlines
- and Turkish Airlines
While none of these airlines would have flown their new 737 MAX jets to China anyways, there is still a knock-on effect. With flight suspensions in place and long-haul aircraft not being used on these services to China, some of them could theoretically be used on certain MAX routes. Of course, with the larger capacity of long-haul jets, to fly a route suited to a 737 MAX would mean a reduced frequency.
Finally, all other 737 MAX customers could be affected indirectly. This is because of the greater knock-on effect of increased worldwide capacity and reduced demand. Many airlines could follow the lead of Vietnam Airlines and put their unused jets up for lease. MAX customers could take advantage of this.
A hypothetical situation would be WestJet, as a 737 MAX customer and 787 operator, leasing Vietnam Airline’s unused Dreamliners for its intercontinental operations. It’s unlikely but hopefully, you get the picture.
To conclude, it seems to only make sense that certain 737 MAX customers would be thankful that they don’t have those extra aircraft at this very moment to deal with. However, assuming that the outbreak will be contained in a few weeks or a month, airlines waiting for their 737 MAX jets will once again be eagerly waiting for their deliveries.
Do you agree with this hypothesis and the coronavirus’ impact on the MAX? Let us know your thoughts by leaving a comment.