The 737 MAX 8, Boeing’s answer to a fuel price crisis that no longer exists, flew for the first time through gloomy Seattle skies today, but there were good reasons for its executives and flight test crew to be smiling for the post landing press conference.
This is Boeing’s least risky, and most profitable jet ever, designed for the fastest growing airline activity, which is single aisle and generally shorter distance flights.
The MAX family is the fourth generation of 737s, with the type first flying in 1967 and entering service in 1968, before the moon landings, before constellations of communications satellites, indeed before so many things that everyone who can afford to fly now takes for granted.
The numbers of the economically empowered increase every day, the more so in the Asia Pacific, but India and Africa are likely to change if not challenge that bias in the current figures within a few decades,
Which is why Boeing, like its rival Airbus, is both excited and jealous about where the single aisle jet boom is taking them. (Jealous because if they can’t build them fast enough, new aerospace ventures in China, India and Russia may seriously shake up the game.)
Like the competing Airbus range of A320 NEOs, the MAXs were conceived when oil benchmark prices were as much as four times as high as today expressed in US dollars. They also reflected a significant need for airlines to replace fleets of older single aisle jets, including McDonnell Douglas DC-9s and MD 80s/90s that were becoming costly to maintain because of aging airframe issues.
The business case for maintaining old jets rather than buying new ones began to fail because the replacements were notably easier to maintain, and could be reliably worked harder, increasing their earning potential by double figure percentages.
The MAX family that first flew today, in the same month that oil benchmark prices, whether Brent, West Texas or Tapis, went below $US30 a barrel, has scored at least 3072 firm orders to add to more than 8000 earlier versions of the 737 built so far.
That’s second place behind Airbus, which has sold at least 4471 of its A320 NEO or new engine option single aisle jets, and already begun deliveries to customers, something that Boeing won’t be able to do until next year, after it completes the test and certification phase of the MAX program.
But in a way being first or second is beside the point. There is huge demand for new single aisle jets of the size Airbus and Boeing offer, and the historic production and development costs have been so amortised that the additional charges for the latest round of fuel (and maintenance) cost reducing improvements are minimal compared to the sales they have secured.
To an extent, the biggest threat to 737 MAX and A320 NEO sales comes from the current versions of these jets, since Boeing and Airbus have both been selling them at run out prices like car dealers dumping brand new vehicles with 2015 manufacturing plates.
However as their production lines scale up and phase into the new models those ‘specials’ will vanish. The MAXs and NEOs will rule, OK.
If you listen very, very carefully, above the sound of Airbus and Boeing struggling to bank the money from MAX and NEO sales, you might just pick up the signs of the next big, well, moderately big thing.
That’s the 250-300 seat sized market for jets that will manage to fit easily into the gates that now take 180-225 seat sized single aisle jets.
What the airlines, and airport owners, will want is to handle more people per flight over single aisle routes than they do today, yet be able to turn those jets around in the same or less time that it takes today to get everyone off, and pack the next load in.
It’s a tantalising challenge. The solutions the plane makers will offer may well include quasi-widebody designs, that have high wings and space for a third set of large doors, ominously similar to those considered essential on high density metro style rail services.
That’s the state of play today. Airbus and Boeing are busy making good money out of improved versions of old designs for single aisle jets.
But they know it can’t stay that way forever, anymore than cheap fuel is going to last much longer than the end of the decade.