Here’s How The Boeing 737 MAX Could Create An Aircraft Surplus

The reintroduction of the Boeing 737 MAX cannot come soon enough for those airlines struggling with the loss of capacity. However, some analysts are warning that the reinstatement of the type could lead to a glut of aircraft, and an oversupply by the time next summer arrives.

reintroduction of the 737 MAX
The reintroduction of the 737 MAX could create an aircraft surplus. Photo: flydubai

1,000 surplus aircraft

While the grounding of the 737 MAX has made life difficult for airlines over the past few months, the reinstatement of the type could bring with it a whole new set of challenges. Boeing has been churning out of the model of the plane since the grounding, albeit at a slightly reduced rate.

This, coupled with the reinstatement of the grounded aircraft and the ramping up of the production rate once the aircraft is cleared to fly could, in itself, present a whole new headache for the industry. Analysts are warning that this could lead to too many planes, and have raised concerns about oversupply.

reintroduction of the 737 MAX
Could an oversupply of aircraft become a problem? Photo: Boeing

Speaking at a briefing ahead of the Airline Economics Growth Frontiers conference today, Rob Morris, global head of consultancy at UK-based Ascend by Cirium is reported by Reuters to have said,

“Next year is the challenge. When the dam breaks and the MAX starts to flow, there are going to be a lot of aircraft. There could potentially be as many as 1,000 surplus aircraft next year.”

A glut of aircraft

In April, in the wake of the grounding, production slowed from 52 per month to 42. Despite problems with storing the completed airframes and concerns that production could be paused altogether, the company has continued at the same rate thus far, equating to 304 airframes built and undelivered.

As well as these, a further 387 have been passed to their owners, and are currently stored awaiting the green light to begin flying once more. This accounts for almost 700 aircraft which are, in theory, ready to enter service in time for summer 2020. But that is just a fraction of the 4,930 airframes on order.

reintroduction of the 737 MAX
Boeing is preparing to accelerate production and delivery of the 737 MAX. Photo: Boeing

In order to clear the backlog, Flight Global reports that Boeing plans to deliver MAX aircraft at a rate of as many as 70 per month once the grounding is lifted. In tandem with this, the company is preparing to raise the output to as many as 70 per month. Should these goals be met, we could indeed see as many as 1,000 extra aircraft in operation by the time next summer rolls around.

Is this really a problem?

While most 737 MAX operators will be happy to see their aircraft back in service or being delivered to their fleets, it’s undoubtedly going to be a challenge to reintegrate them smoothly. Many airlines have held on to older planes, extended leases and shuffled schedules to make up for the loss of capacity caused by the grounding of the MAX. Undoing all this work is going to be just as hard as it was to put it in place.

Rob Morris highlights the changing aviation environment too, arguing that the long uptick of aviation is beginning to slow, and that a sudden deluge of aircraft could overwhelm the increasingly fragile travel market. However, he does openly admit that it’s not as if all the hundreds of aircraft are going to enter service simultaneously.

reintroduction of the 737 MAX
It could take 18 months to two years to deliver the backlog. Photo: SounderBruce via Wikimedia Commons

John Plueger, chief executive of Air Lease Corp is optimistic, telling Reuters that,

“It is not as if all these MAX could be delivered over a one-, two- or three-month period … so it is not an open floodgate and 350 planes all coming onto the market tomorrow.”

What do you think; will the reintroduction of the MAX cause a surplus of aircraft? Let us know your thoughts in the comments.