In a world of mounting backorders in which demand far outstrips supply, disgruntled Boeing 737 MAX customers cannot just take their business elsewhere. Not if they wish to enjoy any semblance of timely delivery.
There are likely escape clause provisions in most of Boeing’s 737 MAX contracts that would allow big customers like Norweigan or WestJet to back out under the circumstances. But where then would they go? While Airbus would be welcome their business with open arms, it would come with a caveat: wait in line…it’s going to take some time. Oh, there would certainly be some preferential treatment and line cutting for key customers, but Airbus is simply unable to solve short-term needs if airlines find themselves unable to operate the 737 MAX or opt to shift away future deliveries from that troubled program.
As the Financial Times puts it, the backlog is real:
Boeing’s arch-rival Airbus, which could typically be a beneficiary of the Boeing crisis, is already working flat-out to produce enough of the fuel-efficient jets just to deliver on its existing backlog of orders. At the end of February the company had an order backlog of 5,962 for its single-aisle aircraft. Meanwhile, Boeing has a backorder of 4,659 737 MAX aircraft.
Airbus, of course, recognizes this and has taken steps to hire more workers. By year’s end, Airbus hopes to produce 63 narrowbody jets per month (up from the current 60). But it cannot go much further beyond that due to the complex supply chain involved in making the final assembly possible.
An Alternate Option: Lease Older 737s
Since Airbus will not be a great help, another solution may lie in purchasing older variants of the 737. While not as fuel-efficient as the 737 MAX, these older aircraft do not suffer from the same (real or perceived) technical problems and may serve as a stop gap if the 737 MAX program is delayed longer than expected. While that would mess up Boeing’s strategic planning and cause a ripple effect to its supply lines, it would not have to shut down assembly lines even if the 737 MAX requires extensive re-tooling.
When I worked for Star Alliance, my primary role was part of the negotiation team for a joint economy class seat acquisition project. Even those discussions with seat manufacturers were prolonged and expensive. Imagine how much more complex aircraft orders are.
At least when it comes to the 737 MAX, Boeing has one thing going for it: most customers do not have a viable alternative.
We allow oligopolies in industries but hate unions?
Oligopolies in aircraft manufacturing, airlines, hotels, cable, entertainment.
These do more to increase the cost than unions. The orange blob in the white house House thr scum that support it are too blame for this mess.
Not a political statement, but rather a historical one: Didn’t the airline oligopoly emerge during the previous administration? I really hate the outcomes it has created for consumers — less competition has actually created more “co-opetiton” with carriers essentially matching and copying each other to the point of commodization across the board.
Yes. Obama was no saint. Just because I think trump is scum and POS and should be in jail doesn’t mean I support obama or Clinton.
I was wondering how the two things that were most anti american workers NAFTA and TPP were tried under Democrat presidents. The really bad part of TPP was that obama did not include strong worker protections for people that would lose their jobs or couldn’t sell it well. Very incompetent.
Anyway I do think airlines do not openly collude but do engage in “scratch my bank scratch your back” like mafia v by splitting the pie (what you term cooptetion) Governments should not allow mergers of domestic airlines, only international. Maybe we should have separate domestic and international for US3.
Surely the 737-800 is a viable alternative for most carriers; some would even be pleased with the bargain-basement price Boeing will be forced to offer. Let’s face it: it’s going to be many, many months, if not years, before the MAX situation is resolved ( I’m not buying the Boeing suggestion of an April fix…more likely April 2020, at the earliest. Rough days ahead for Boeing , fully deserved.
I see many airlines diving into the used markets for A320s and A321s. Doing a delta isn’t a bad thing in this situation. Consumers might just shy away from the airline at sight of a 737, max or not.
Change business model
It’s interesting to reflect on how fast China built it’s high-speed rail network. While they can’t do this overnight, surely China can ramp up C919 production relatively quickly and, while it may not appeal to Europeans or Americans, it certainly could be an alternative for airlines operating in Asia and across the Global South.
I also think some Western airlines — perhaps Ryanair — may be willing to patiently wait for Airbus, if it means avoiding years and years of operating the majority of their flights with a model now synonymous with death.
Its not the plane, its the pilots. The story about the off duty pilot saving the Lion Air plane the day before crash by running through check lists make is obvious
Or it’s Boeing, short cutting the approval/certification/trading process for a marketing advantage, ie serving mammon. The CRIMINAL investigation now underway should get to the bottom of it.
Is removing MCAS from 737MAX possible (or viable)?