Boeing’s 737 is the focus of some attention this month, given the dust-up at the DOC. This amazing aircraft was first delivered in 1967 (December 28, 1967, or 18,164 days ago today) and is the most delivered commercial aircraft. Through year-end 2016, Boeing had delivered 9,188. No doubt this aircraft is critical for the company; through August Boeing delivered 324 737s out of 476 total deliveries. In 2016 the 737 accounted for 65.5% of deliveries and in 2017 the 737 is at 68%. Is this a franchise worth defending? Absolutely!
Take a look at the 737 delivery history through year end 2016. As we can see the company has been through several iterations of the 737 (excluding military variants). It is arguably the most adaptive design in commercial aviation.
The red arrow will have caught your attention. This points to 2006, the last year a 737 with under 150 seats was important in new deliveries. The most recent new delivery 737-700 was October 20, 2016. The following chart shows commercial variants of the 737-700 delivered.
The really interesting item here is to see how deliveries of the 737-700 declined as oil prices rose. The smaller 737 was not as attractive because its economics did not favor higher oil prices. As the top chart shows, 737-800 deliveries grew very well all through high oil prices. Airlines saw the benefit of upsizing and moved to the 737-800.
A similar chart for the A319 and oil prices can be made, and A320 deliveries remained strong just like the 737-800.
It appears that the 737-700’s primary competitor has been the A319 as this next chart illustrates. Both saw declines in deliveries with spiking oil prices.
What charts and data suggest is that:
- Boeing’s 737-700’s competitor is the Airbus A319
- But the last oil price spike was used as an opportunity by both OEMs to drive customers into larger models with better seat mile economics
- This strategy was successful. Orders for new deliveries for both these aircraft have essentially dried up.
Which means this segment of under 150 seats is wide open to newcomers. Like the C Series and E2. Airbus and Boeing have left this market. Airbus seems to acknowledge this. Boeing not so much.
Co-Founder AirInsight. My previous life includes stints at Shell South Africa, CIC Research, and PA Consulting. Got bitten by the aviation bug and ended up an Avgeek. Then the data bug got me, making me a curious Avgeek seeking data-driven logic. Also, I appreciate conversations with smart people from whom I learn so much. Summary: I am very fortunate to work with and converse with great people.
Airbus will IMJ likely re-enter this market with a short-to-medium range, hybrid electric aircraft some 10 years hence.