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Industry Impact: The Boeing 737 MAX Will Have to Compete
On December 8th, Boeing rolled-out the new 737 MAX aircraft. It had been anticipated for a while, and was seen as an imperative product release for Boeing to come up with an alternative to the Airbus A320neo as quickly as possible. Following the legacy of earlier Boeing 737 versions, it seems that the MAX will be incredibly popular among airlines, as Boeing has received almost 3,000 orders from 60 different customers around the world. The entire MAX family will consist of four variations, including the 737 MAX 7, MAX 8, MAX 9, and MAX 200.
The current single-aisle fleet across the globe consists of an astonishing 14,100 airplanes. North America leads this grouping with more than 3,800 in service. Over the next 20 years, the single-aisle market will continue to enjoy robust demand—estimated at 26,730 airplanes that are valued close to $2.8 trillion. With this tremendous expected growth, it is imperative that the long-term demand for single-aisle airplanes can be met through this new aircraft. The Boeing 737 MAX is not short in any way on facts or savings projections, and therefore it is important this be at the forefront of all discussions. The reality is a simple average of single-aisle demand is more than 110 airplanes per month, excluding deliveries for non-commercial (private, military, and government) uses, when the current industry production levels are below 90. Boeing hopes its latest aircraft can fill some of this need.
Delivery demand for passenger aircraft from 2015 to 2034 (Source: Boeing Market Outlook)
Narrowbodies are forecasted to make up 70% of all aircraft deliveries over the next two decades, and apart from Boeing and Airbus, there are new players with competing products.
One of them is China’s aircraft manufacturer, Commercial Aircraft Corp. of China (COMAC). Boeing forecasts that Chinese airlines would need more than 6,000 planes in the next 20 years. COMAC is building the 158-168-seater narrowbody C919 airplane with engines from CFM International. The jet will have a maximum range of 3,444 miles and is slated to enter service in 2018. With about 400 orders, the C919 could create trouble for both Boeing and Airbus, whose 737 and A320 have been the most popular narrow-body aircraft flying across the globe.
Other competitors include Russia’s Irkut MS-21 and Canada’s Bombardier C-Series. Through with the 180-seater MS-21, the Russian government has been venturing into the local and overseas civil aviation markets, and is looking to take on the narrow-body offerings of Boeing and Airbus with a wider cabin. The prototype of the aircraft is scheduled to be rolled out next year. Irkut claims that the jet has lower empty weight, higher fuel efficiency and better aerodynamics than competitors. The CSeries is also pitted against the A320 and 737, with Bombardier asserting that the aircraft line is 20% more fuel efficient over similar options. Its carbon emission is 20% lower and results in 15% lesser operating cost.
The first flight of the 737 MAX is expected to take place in early 2016. With rivals getting into position with competitive products in the 100-200 seat market, the 737 MAX is still expected to absorb a major share in the single-aisle market over the next decade. Based on how the next phases progress – testing, certification, and production rate – the industry will be able to appraise the success of the Boeing 737 MAX.
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