Insight: Comparative Economics – MAX7 vs. A220-300

The comparative economics of aircraft is a key driver in fleet planning decisions.  Many factors come into play in analyzing the differences between models, particularly when there is an incumbent aircraft with existing infrastructure in place.  Such was the recent decision by Southwest Airlines to choose the Boeing 737 MAX 7 over the competing Airbus A220-300.

Of course, airframe OEMs know one game quite well, which is pricing to the point of economic indifference.  Each of the manufacturers has a good idea of how well their competition will perform in terms of fuel burn, maintenance costs, training and crew costs, landing fees, and the intangibles such as ground support equipment and initial spares provisioning. An economic analysis of all of the factors will typically find one aircraft a few percentage points better than another, which forces the competing manufacturer to reduce margins and cut price.