Introduction
The aviation industry is one of the most restrictive but highly competitive industries in the world, and the success of any aviation program depends on several factors. This essay will analyze Boeing’s 737 Max program, one of the most controversial programs in aviation since at least two accidents occurred in 2018 and 2019 involving 737 Max aircraft. Specifically, this essay will focus on the original business case for the program, the competition, marketplace changes, external factors, and prospects to assess the success and potential of the Max 737 program.
Boeing’s 737 Max Program Analysis
The Original Business Case
The development of the 737 Max program was initiated as a response to the development of the 737 Next Generation (NG) Series aviation program by Boeing—the program aimed to increase fuel efficiency, the aircraft’s range, and improve passenger comfort. Given the success of the previous 737 programs, Boeing projected that the Max program would see substantial demand since the aircraft being developed would be more fuel-efficient (Jayawardana, 2020). This confidence in the demand for single-aisle aircraft was informed by the fact that fuel prices were rising, and at the same time, demand for air travel was rising worldwide (Daoxin, 2021). Consequently, the original business case aimed to leverage the existing customer base and provide airlines with a cost-effective solution.
Before Boeing, the 737 NG series had established itself as a reliable and safe workhorse for airlines worldwide. However, as fuel prices began to rise and environmental concerns became a significant issue, Boeing began to explore the development of a replacement aircraft for the 737 NG series program (Silva et al., 2019). Consequently, the 737 Max program was born as it promised more than 20% efficiency in fuel consumption compared to its predecessor. At the time of the development of the 737 Max program, airlines were already searching for aircraft designed for longer-range flights to serve new markets and expand their network. Thus, the idea of developing the 737 Max program was in response to the demand for an aircraft that could travel longer distances demanded by airline customers and save on fuel.
Competition with Other Aircraft/Manufacturers
America’s Boeing and Europe’s Airbus dominate the world’s aircraft industry. Consequently, the major competitor for the 737 Max aircraft was the Airbus A320neo series. Airbus had a head start against the 737 Max program, which it got by launching the Airbus A320neo in 2010 (Kurniawan, 2021). Thus, the 737 Max program faced some of the most intense competition in the aviation industry because of its delayed entry into service. Airbus gained a considerable market share before the 737 Max aircraft could be launched. This strategy by Airbus challenged Boeing’s dominance in the narrow-body aircraft segment.
The competition between Boeing’s 737 Max and Airbus’s A320neo series aircraft intensified once Boeing unveiled and eventually introduced the 737 Max aircraft into the market. At the same time, the 737 series aircraft had created a solid base for Boeing; its late launch of the 737 Max aircraft almost entirely diluted its competitive advantage against Airbus’s A320neo series aircraft (Ajot, 2022). Consequently, a perception in the market emerged that Airbus’s single-aisle aircraft in this category were much better than Boeing’s.
The competitive dynamic of these aircraft by Airbus and Boeing evolved further in 2018 and 2019 when the 737 Max aircraft were involved in fatal accidents that killed hundreds of people (Collings et al., 2022). The unfortunate events gave Airbus an edge, allowing it to capture an even greater market and position itself as a reliable and safe alternative to the 737 Max aircraft. Despite working to improve its safety, the Max 737 aircraft has enjoyed market dominance that is common with other Boeing aircraft.
Changes in the Marketplace
The marketplace has witnessed monumental changes during the lifetime of the 737 Max program, which has had a monumental impact on its success and trajectory. One of these changes was the COVID-19 pandemic in 2020, which threatened to decimate the aviation industry. Airline travel reached a standstill in 2020 after governments worldwide enacted stringent measures to limit the spread of the pandemic (Dube et al., 2021).
The reduced air travel led to the cancellation of aircraft orders, delayed deliveries, and a decline in delivered aircraft (Xuan et al., 2021). The unprecedented changes in the market induced by the pandemic challenged aircraft manufacturers. They affected the demand and delivery of aircraft such as the Boeing 737 Max, as most airlines shelved expansion plans.
Before the pandemic, there was a shift in air travel demand driven by increased air travel customers from emerging markets. An increase in relative wealth and disposable income by people in developing countries saw a rapid increase in demand for low-cost carriers and a surge in the number of travelers (Rothengatter et al., 2021). Airlines in these regions sought fuel-efficient and operationally cheaper aircraft to adapt to these changes. Consequently, these changes in market dynamics saw an increase in demand for Boeing 737 Max aircraft before this demand was almost entirely wiped out by the pandemic and a series of fatal accidents involving these aircraft.
During the 737 Max program’s lifetime, environmental concerns have become a key consideration in the aviation industry. Specifically, stakeholders, including passengers, governments, and regulatory bodies, expect airline manufacturers to prioritize fuel efficiency to reduce the aircraft’s carbon footprint (Rupcic et al., 2023). The 737 Max program was more fuel-efficient compared to its predecessor, which aligned the aircraft’s design and specification with market expectations and the industry’s expectations of greener operations (Nowacki & Olejniczak, 2018).
Finally, accidents involving the 737 Max aircraft led to a shift in the aircraft certification process and safety standards. Specifically, more stringent measures were instituted to ensure a closer examination of aircraft design and systems (Demirci, 2021). This shift now demands that Boeign comply with these regulations by collaborating with inspectors and undergoing the new certification protocols.
Economic, Technological, Political, Environmental, and Regulatory Factors
Like any other aircraft program, the 737 Max program is affected by political, economic, legal, technological, and environmental factors. Specifically, economic factors have significantly impacted the program’s success. These factors include fluctuating fuel prices, profitability in the airline industry, and global economic conditions. Higher fuel prices saw Boeing replace its 737 NG series aircraft with 737 Max aircraft to be fuel efficient over increased distances. In addition, economic downturns such as those experienced globally after the emergence of the pandemic in 2020 saw demand for aircraft plummet as airline companies shelved plans for fleet expansion and modernization.
Technological advancements have also impacted the development of the 737 Max program. Specifically, improved engines and aerodynamics have been key in developing the 737 Max program. Boeing 737 Max aircraft have advanced engines with innovative winglets contributing to fuel efficiency (Herkert et al., 2020). Another key consideration for the program is political factors. The accidents happened with aircraft from this program have increased its political and regulatory scrutiny due to safety and corporate governance concerns (Travica, 2020).
Additionally, growing environmental concerns have led to pressure to reduce airline emissions. This pressure motivated Boeing to design the 737 Max aircraft, which is more fuel-efficient than its predecessor. Finally, the regulatory environment has tightened due to accidents involving aircraft from this program (Sgobba, 2019). Specifically, certification and safety standards have been tightened to prevent future accidents.
Future Prospects
The success or failure of the 737 Max program will depend on several factors, such as market demand recovery, safety concerns, the competitive landscape, and technological advancements. Specifically, due to the aircraft accidents, Boeing will have to rebuild trust with customers, regulatory bodies, and passengers (German, 2020). The successive accidents saw several airlines abandon plans to purchase 737 Max aircraft, while others stopped using such aircraft in their inventory due to safety fears.
If the program is to succeed, it will need to reassure stakeholders that safety is guaranteed. Additionally, the recovery of the airline industry, especially after the COVID-19 devastation, will lead to increased demand for 737 Max aircraft. Further, Boeing can take advantage of the increased air travel to increase demand for aircraft from this program.
The 737 Max program will continue to experience pressure and competition from Airbus’s A320neo program. As such, Boeing must be innovative and offer more fuel-efficient, comfortable, and safe aircraft. To increase its competitiveness relative to Airbus, Boeing should focus on electric propulsion technologies, the innovation of more sustainable and cheaper aviation fuels, and advanced materials that can lead to greater fuel efficiency and improved overall performance (Woo et al., 2021).
Finally, Boeing’s success in developing other successful aircraft models will impact the 737 Max program. To demonstrate its continued innovation and growth, the company must embark on developing next-generation aircraft (Zaporozhets et al., 2020). The new aircraft may incorporate features from this program, leading to the discontinuation of the program in favor of replacing aircraft from the 737 Max program with newer generation aircraft.
Conclusion
In conclusion, the Boeing 737 Max program has faced numerous problems, such as accidents, regulatory scrutiny, and increased competition from Airbus. Consequently, the program’s continued success will depend on Boeing’s ability to rebuild stakeholder trust, adapt to a rapidly evolving marketplace, and address safety concerns. While the program prioritizes fuel efficiency that addresses environmental concerns, its future feasibility will depend on Boeing’s continued innovation and response to changing customer needs. Thus, this analysis of the 737 Max program shows the complex nature of aviation by highlighting the multiple factors that impact the success and potential of Boeing’s 737 Max program.
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