Air India, SpiceJet May Face $40–50 Mn Insurance Hike; Airfares Likely To Rise 2–5%: Report
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Air India and SpiceJet may see insurance premiums rise to $40–50 million after the crash, possibly pushing airfares up by 2–5%.
Despite the catastrophic crash of Air India Flight AI171 near Ahmedabad, immediate aviation insurance premium hikes are unlikely, Narendra Bharindwal, President of the Insurance Brokers Association of India (IBAI), told Moneycontrol. However, he added that the cumulative impact of repeated Boeing-related incidents could drive up premiums across the aviation sector in the upcoming underwriting cycle.
According to reports, Boeing aircraft operators—particularly Air India, which operates 34 Boeing 787s and has 20 more on order, and SpiceJet, which flies Boeing 737 MAX 8s—could face premium increases from around $28 million to as much as $40–50 million. This may lead to a 2–5% hike in airfares, sources told Moneycontrol, as airlines look to offset rising insurance costs.
Moneycontrol.
Premiums Could Rise 100% by 2026
Industry sources said that insurers may now view Boeing operators as higher-risk compared to Airbus-dependent carriers like IndiGo or Vistara, leading to a hardened market. Experts such as Hitesh Girotra of Prudent Insurance Brokers believe the combined fallout of the MAX and 787 issues—now topped by the Air India tragedy—could increase aviation premiums for Boeing operators by 20% to even 100% in 2026. 'The market is clearly hardening, and Boeing's deteriorating risk profile is a central reason," Girotra told Moneycontrol.
The crash of Flight AI171 on June 12, killing 241 of 242 on board, marks the first-ever fatal Boeing 787 accident. The incident could spark insurance claims of up to Rs 300 crore split between Indian insurers and global reinsurers.
The Aircraft Accident Investigation Bureau (AAIB) is probing the crash with support from Boeing and the U.S. National Transportation Safety Board (NTSB). If defects in the 787's design or production are uncovered, Boeing's liability insurers may face lawsuits echoing the $2.5 billion in settlements paid after the MAX disasters.
Boeing's Long Road of Turbulence
Boeing's aviation insurance costs surged after the twin MAX crashes in 2018 and 2019, which killed 346 people and exposed systemic failures in design and FAA oversight. The MAX was grounded globally for 20 months, costing Boeing more than $20 billion in direct losses and $60 billion in canceled orders.
An internal 2016 survey cited by US investigators revealed that 40% of Boeing employees involved in safety certification felt 'undue pressure" to fast-track approvals. The fallout led to significant premium hikes for Boeing operators, with Air India's own insurance cost nearly doubling post-2019.
The troubles didn't end there. The 737 MAX 7 and MAX 10 are still awaiting certification as of June 2025, with approvals delayed to 2026 due to technical flaws and tightened FAA scrutiny, especially after the Alaska Airlines MAX 9 door plug blowout in January 2024. The FAA has also revoked Boeing's authority to self-certify airworthiness for MAX aircraft.
Meanwhile, Boeing's 787 program has been under audit after reports of fastener installation errors and falsified records. The crash of Flight AI171 only intensifies these concerns.
Airlines May Pass Costs to Flyers
Analysts told Moneycontrol that higher insurance costs could derail Air India's ambitious fleet retrofit program and strain SpiceJet's planned Rs 3,000 crore capital raise, likely prompting a cost pass-through to passengers.
'In a hardened insurance market, Boeing operators are clearly under pressure. Passengers could bear the brunt in the form of higher fares," one analyst noted.
With the insurance market tightening and Boeing's risks amplified, the financial impact of the Air India crash is expected to ripple across global aviation, insurers, and passengers alike.
tags :
Air India crash Aviation disasters
Location :
New Delhi, India, India
First Published:
June 13, 2025, 12:36 IST
News business Air India, SpiceJet May Face $40–50 Mn Insurance Hike; Airfares Likely To Rise 2–5%: Report
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