737-7 MAX future appears to be niche, BBJ and military

Discussion
Shifting market

Long before Boeing filed its trade complaint with the US International Trade Commission and the US Department of Commerce alleging the Bombardier C Series killed the 737-700 and is a threat to the 737-7, the smallest member of the 737 family had been reduced to a niche aircraft.

Customers abandoned the 737-700 for the larger 737-800. Even Southwest Airlines, which ordered more 737-700s than any other customer, abandoned its remaining orders for this sub-type in favor of the larger -800. At the time, Boeing encouraged Southwest to do so, LNC was told by an insider.

According to the Boeing website, there hasn’t been an order for the -700 since 2014, for two by an Unidentified customer. Before this, the last previous order from in 2011, for one from Southwest.

Orders for the 737-700 were on the decline before the C Series program was launched at the 2008 Farnborough Air Show.

By July 2011, when the 737 MAX program was launched, orders had all but dried up. The 7 MAX was not launched until May 2013, when Southwest ordered 30—converting 30 orders from the -700 to the reengined airplane.

Now, Southwest deferred delivery of 23 of those 30 orders for four years. It will take delivery of seven next year.

The airline with the second largest number of orders, for 25, is Canada’s WestJet. WestJet last year dropped two from this order, swapping these for larger 737 MAX aircraft. Deliveries now stretch to 2027. Five will be delivered next year, but other deliveries have been deferred, skipping 2020 and moving more into the 2023-27 period from 2022.

Redesigning the 7 MAX

Faced with poor sales of the 126-seat 7 MAX, Boeing redesigned the airplane in 2016.

The MAX 7 now has the same wing and engines as MAX 8, so hot-and-high and short-field performance is better with the shorter fuselage than on the MAX 8.

But the redesign didn’t boost sales.

The fundamental issue is that the original 737-7 design, which was simply reengining the 737-700, produced an airplane that didn’t offer airlines a big improvement. Furthermore, the market had already decided the -700 was no longer desirable, preferring instead the larger -800.

When the original 7 MAX design didn’t sell for the same reasons, Boeing redesigned the 7 to be a straight-forward shrink of the 8. The 7 had been substantially different to the 8, complicating production. Now, as a shrink, production is simplified, which is a good thing.

But as a shrink, it is well known in the industry that shrinks are not as efficient as the model from which they are shrunk. The operating costs tend to be about the same as the larger airplane, which has more seats.

Niche airports

One of the 737-7’s chief attributes, as a shrink, is its ability to better operate from hot-and-high airports and “difficult” airports.

In it’s complaint over the C Series, Boeing’s filings with the US government touted this feature. It said that there are 500 airports in the US and a few fall within the hot-high, difficult category. However, Boeing redacted the number or names of the airports from its public filings.

Still, one of the other filings included the number: it is 16.

LNC knows that Chicago Midway, Burbank (CA) and Orange County (CA), south of Los Angeles, are three of them. Jackson Hole (WY) is probably on the list. Denver falls into the hot-and-high category, but its long runways mitigate restrictions for most aircraft (though not the 737-10, which is range-restricted under a full passenger load).

Phoenix and Las Vegas are extremely hot, affecting most if not all aircraft at the height of the summer.

It follows that the 7 MAX performance will be better than the 8 MAX at these airports.

But niche airport needs are limited. So is the demand for niche airplanes to serve them.

Delta operates 10 737-700s for niche airports. It testified is doesn’t want any more of this size and wasn’t interest in the 7 MAX for this reason.

Southwest needs the 7 MAX for Midway, Burbank and Orange County. Other airports that it may need the airplane for are unknown to LNC. WestJet’s niche airport requirements are also not known to LNC.

The jet age is replete with niche airplanes. Some were “transition” airplanes, like the Boeing 747-300, between the -200 and -400. Some were for ultra-long-haul routes (for their day), like the Boeing 747SP and Douglas DC-8-62. Boeing built several niche 707s: the -227 for Braniff Airways’ hot-and-high Latin American system, the -138 for Qantas Airlines’ long-haul service and the -420 for British Empire airlines that insisted on the Rolls-Royce engines.

McDonnell Douglas built the DC-10-15 for Mexicana’s hot-and-high Mexico City operation and the DC-10-40 for Japan and Northwest airlines, which wanted Pratt & Whitney engines.

Douglas also built the DC-9-20, for SAS. This combined the DC-9-10 fuselage with the DC-9-30 wing for difficult airports. Only 10 were built. The McDonnell Douglas MD-87 had better sales. Combining the fuselage of the 130-seat DC-9 with the wings and high-powered engines of the MD-83, Midway Airlines needed it for Chicago Midway to the US West Coast. MDC built 75 airplanes for a small number of airlines.

Other uses

When Boeing redesigned the 7 MAX, range for the BBJ was pegged at 7,000nm. The US military also needs replacements for its small fleet of C-40s, the military designation for the 737-700. It has 21. One famously became stranded in transit with a VIP government mission to Asia due to a mechanical issue.

The need for BBJs and military transports is limited. Boeing, however, is creative at proposing other military uses for its aging aircraft. The KC-46A is the best example. The P-8 Poseidon, based on the 737-800, is another. A replacement for JSTAR 707-based aircraft is needed. With the stretch to nearly the size of the 737-8 and using the -8’s wing, perhaps a 7 MAX could make a reasonable platform choice for JSTAR or other military uses.

Outstanding orders

There are 63 known firm orders for the MAX 7. In 2016, China’s Kunming Airlines announced a Memorandum of Understanding for 10. It’s unknown whether this was ever converted to a firm order. Kunming is not listed on Boeing’s website as an “unfilled” customer in the backlog. However, it is not uncommon for Chinese orders to go into Unidentified for announcement as some later date.

It’s also possible there are other 7 MAX orders in Unidentified.

  • Southwest Airlines: 30
  • WestJet: 23
  • Jetlines Canada: 5
  • Air Lease Corp: 5
  • Total Firm: 63
  • Commitment by Kunming Airlines of China: 10
  • Update: A La Presse in Canada reports Jetlines canceled its order.

 

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