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The decision to “right size” the 737 MAX7 has caught the attention of industry observers.  Some think it’s a mistake, while others think it is the ideal reaction to Airbus, with an unintended consequence of also giving Bombardier another hurdle.  Either way, the process of how Boeing got to the position of re-thinking the MAX7 demonstrates that Boeing can and will change direction quickly as needed. 

The following chart might help explain how Boeing got to thinking about the sizes of the MAX variants.


The original 737 typically seated 85 (100) or 97 (200) in a two class configuration.  The Classic (500/300/400) seated typically  108 to 146 in two class configuration.  The NG (600/700/800/900) typically seated  108 to 177 in two class configuration.  The MAX (7/8/9) typically seats 138 to 180 in two class configuration.  Each generation of 737 has grown in size and has seen capacity grow even faster with thin-line seats.

From the first iteration of the 737, the larger model outsold the smaller model.  On the original, the ratio was 37 to one.  On the Classic we see the smallest model, the -500, was outsold by the combined -300 and -400 models by 4.1 to one. On the NG, the larger -800 and -900 models outsold the combined -600 and -700 by over 4.3 to one. That is even after Southwest became a huge customer for the -700.  More recently, even Southwest started to switch to the 800.  Finally, when we look at the MAX, the 7 is outsold by the 8 and 9 by a ratio of 47 to one.  Boeing led (or followed) the market and continuously up-sized each generation.  The mantra has been (as oil prices rose) that airlines could make more money flying the larger capacity. This larger capacity saw costs rise more slowly than potential revenue, which was great during expensive oil and 80% load factors.  Circumstances supported Boeing’s thinking about up-sizing.

It would seem self-evident therefore that Boeing was going to focus on the MAX8 and 9 when the MAX line came about.  The history shows the bigger aircraft is the way to go.  Up-sizing sold better than right-sizing for Boeing.  literally decades of experience reinforced this thinking.

But Boeing faced a competitor with 150 seats called the A320.  The A320 and the A321 recently started to sell better than the Boeing equivalents.  In head to head competition, Boeing has to essentially give customers 12 seats for free when the -800 competes against the A320.  The MAX8 maintained that problem against the A320neo.  Customers were squeezing Boeing to match prices with the smaller A320 and in doing so, obtain more up-size revenue potential.  This is great for customers, but not so great for Boeing.

The MAX8 is selling very well.  But that free seat issue hasn’t gone away.  In fact, looking at the minuscule sales for the MAX7, one wonders why Boeing even bothered with it.

But Boeing will not concede and it is playing a tough hand well. It will make as standard a model as it can – the MAX7 will closely resemble the MAX8 except be a tad shorter, using the MAX8 wing and landing gear.  This is a lesson from Toyota – keep things as close to standardized as possible.  Manage production costs and still offer customers a choice.  You want 150 seats? You can have that. You want more seats? You can have that too – but it costs more. No more free seats.

Boeing therefore manages to better compete with Airbus and conveniently adds to pricing pressure on Bombardier.  So far so good.  Will customers flock to the re-sized MAX7?  That may be a tough call because Boeing has trained its sales team (and customers) to talk the market up.  It will be interesting to see what happens. It appears the current MAX7 customers are excited about the prospect of going from 126 to 138 seats.  Yes, the MAX7 is an up-sized 700.  That up-sizing pattern apparently cannot be broken.

Now what happens with the MAX9 vs the A321?

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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.

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