How good is a MAX 7X and why would it replace the original? Part 4

By Bjorn Fehrm Subscription required Introduction May 23, 2016, ©. Leeham Co:In Part 1 to Part 3 of this article series,we looked into the reasons behind that Boeing is considering changing the 737-7 MAX into a slightly larger 737-7X.
Max 7 2016.05

Figure 1. Boeing’s 737 MAX 7. Source: Boeing.

When an aircraft gets larger, its operating costs increase, everything else being equal. At the same time, it can take more passengers. This will increase the aircraft’s revenue generating capability, assuming the network can generate the traffic level needed. To understand the difference in revenue capability for the 7 and 7X we will now develop their Direct Operating Cost (DOC) and compare these with the revenue generation capability of the aircraft. This gives the margin capability and one can establish where the cross over point would be between 737-7 and 7X with respect to margin for the airline. Summary
  • We develop the Direct Operating Costs (DOC) for the 737-7 and -7X.
  • We also develop the revenue streams of the aircraft over typical missions.
  • When compared, the margin of the aircraft will result and it will be possible to define the extra passenger count needed for the 7X to deliver the same margin as the presently defined 7 MAX.
  • We then can establish the revenue upside potential for a 737-7X over the 7.

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