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Boeing's long lived and very successful 737 series plane is no longer a strategic asset for the company.

Its past unwillingness to replace it may now be coming back to haunt it.

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Airbus Fires the First Shot in the New A320/737 War with Boeing - part 4 of 4

Boeing's Big Problems

The original 737-100, which first took to the skies in early 1967.

Part 4 of a series on the needed evolution of the Airbus/Boeing A320/737 aircraft. Click the links at the bottom to read through the other three articles in the series.



Boeing has been understandably slow to proceed with replacing its spectacularly successful 737 family of planes, a plane that dates back over 40 years.

But unfortunate timing and external factors are now squeezing Boeing in unexpected ways, resulting in it having no easy or good choices for how to respond to Airbus, just a series of successfully worse and worse choices.

It will be very interesting to see how the airplane manufacturing industry reshapes itself due to the changes in the former Boeing/Airbus 737/A320 duopoly, one which is unlikely to last much longer.

Boeing's one time unquestioned primacy - something far from clear these days anyway - is being challenged as never before.

Boeing's Problem

Airbus can freely choose either to re-engine its A320 family or to design an entire new family of aircraft.

Boeing can't do this quite so readily, because its 737s have less clearance between the engines and the ground.

A new engine design would almost certainly involve a larger diameter, and therefore, would place the engine closer to the ground.  This is okay with an A320 type plane, but not okay for a 737 type plane.

If Boeing is to simply re-engine its 737s, it will also need major modifications to its undercarriage to lift the plane higher off the ground (without making the plane become unstable as a result).  This adds further lead time, cost and complexity to the project.

Boeing's 737 is also a more highly 'tweaked' airframe already.  It has gone through several design changes over its 40 year life, and it is already near maxed-out in terms of performance potential.

Airbus Makes the First Move

And so, after many years of staring each other down, Airbus has become the first company to announce its plan for an upgrade to its current A320 series of planes.

After dropping hints earlier in the year, in early December 2010, Airbus said that it will re-engine the A320, offering two new engine alternatives, one from Pratt & Whitney, the other from CFM.

The new plane is designated the A320neo - with 'neo' standing for 'new engine option'.

The cost to Airbus is expected to be about €1 billion ($1.35 billion), and Airbus say that with the new engines, the A320neo will be about 15% more economical to operate.

The more efficient engines also mean the plane will be able to either fly further (almost 600 miles more range) or carry more payload (about 2.2 tons of extra cargo/passengers).

Airbus expects the new plane to be in service in 2016, and says this will extend the overall life of the A320 series through until about 2025 - nicely timed to segue in to the new open rotor engines expected to be available then.

What Can Boeing Do

Boeing has said it is not considering re-engineering the 737 (without actually saying that the main reason for not doing this is due to insufficient ground clearance and the problems associated with it).

So what can it do instead?  Rush to develop an entirely new plane, using today's best practices for composite material construction?  If it does this, it would be able to get the plane to market perhaps some time towards the end of the 2010's - 2018 or 2019, assuming that it manages the development process better than it has the 787 and 747-8.

Such a new plane would definitely equal and possibly beat the A320neo series, and would therefore accelerate Airbus' need to come up with a complete new plane.

But Airbus could choose to start development on the complete new plane a year or two subsequent to Boeing's start, and so it could adopt improved composite technologies, and come out with a newer plane that would beat Boeing's 737 replacement, causing Boeing to have to then develop yet another series of planes, making use of what may have then become a more stable and less rapidly changing set of composite manufacturing techniques.

This would be a nightmare scenario for Boeing.

Airbus is hoping to do only one complete rework of the A320 series - in time for the open rotor engines in about 2025.  Boeing is trying to work out what it can do to avoid having to do two reworkings.

Alternatively, Boeing can sit tight for a year or two, and thank its lucky stars for loyal airline customers such as Southwest, and hope it can continue to pick up some sales, and then develop a 737 successor once it has a better knowledge of the new composite materials.

Boeing might also think it better to discount planes by some millions of dollars a piece.  A 737 currently lists in the $50 - $90 million price range (list prices are typically discounted by 20% up to 35%).  If Boeing can save itself $5 billion or more by not developing any sort of 737 upgrade/replacement, maybe it could afford to discount up to 1,000 737s by $5 million each so as to compensate for the the superiority of an A320neo over a 737.

Did Boeing Cause its Own Problem?

If Boeing had decided to replace its 737 series of planes five or ten years ago, it wouldn't now be faced with the difficult quandary of how to upgrade the plane only once rather than twice in the next fifteen years.

Instead, it would have added a great deal of pressure to Airbus at a time when Airbus was very vulnerable and overcommitted, and might have caused Airbus to take the 'easy way out' by re-engining the A320 series, giving Boeing a lead and a longer pay back for its replacement to the 737, putting Airbus on the back foot.

But instead Boeing did nothing, and now it finds itself having painted itself into a corner, with no good choices at all, only a series of bad ones.

Boeing's Best Bet?

Maybe Boeing's best bet is to do little for now, while stealthily progressing a new airframe design as best it can, so that when it has the technologies able to put the projected design into reality, it can do so in a shorter lead time.

Boeing currently has an order backlog of about 2100 737s, which represents almost six years of production.  In other words, it is currently (more or less) taking orders for delivery in 2016 and beyond.

If it can keep its backlog full, it could also offer airlines an upgrade/conversion option, and priority places in line for any 737 successor model it builds, giving airlines a 'best of both worlds' reason to stay loyal to Boeing.

This would be difficult to finesse, however, because once it announces its successor plane series, there is a danger that most of its forward orders for the 737 would switch to the new plane, causing a collapse in 737 demand and raising the specter of some years where no-one wants to accept 737s but the the new model plane is not yet ready for production.

Boeing doesn't really have a best bet at all, and maybe it needs to 'bite the bullet' and spend extra money to upgrade the current 737 as best it can to allow for larger engines.

Boeing very neatly snookered Airbus when it deployed its 787 and Airbus made two mistakes in responding to it - first by doing nothing, and second by coming up with an inadequate design of plane.  Airlines ordered 787s by the hundred while all Airbus could do was helplessly watch until finally coming up with a credible design in 2007, by which time Boeing had collected almost 700 orders for the 787.

But Boeing now risks being in the same situation Airbus was, with the vital 737 series.

Twenty Planes a Week

Airbus made its announcement on 1 December, just over three weeks ago.  So far, Boeing has not made any credible response.  While three weeks is nothing substantial at the glacial pace of airplane development, it is still 1% of the total leadtime between the Airbus announcement and the first commercial flight of the new A320neo.

Furthermore, with 737/A320 (and C-919 and MS-21 and CS300) sales proceeding at a rate of about 20 orders every week, sooner or later Boeing is going to find itself behind the curve for - thus far - 60 plane orders.

And each successive week Boeing does nothing will mean, sooner or later, another 20 plane sales that Boeing will have to struggle harder (ie discount more) to have any chance of winning any part of.

So - what's it to be, Boeing?

This is part 4 of a series on the needed evolution of the Airbus/Boeing A320/737 aircraft.  Please see also the other parts of this series :

1.  The vital importance - and growing problems - of the A320 and 737 families of airplanes
2.  Why Airbus and Boeing don't want to - but must - update their aging airplane series
3.  Engine issues and what Airbus and Boeing could do
4.  Boeing's big problems

If you liked this, you might also enjoy our multi-part series 'Where is Boeing Going'.

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Originally published 24 Dec 2010, last update 30 May 2021

You may freely reproduce or distribute this article for noncommercial purposes as long as you give credit to me as original writer.



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