Richard Aboulafia: April 2018 Letter

Dear Fellow Aircraft Enthusiasts,

Being the 737 is a thankless job. That’s my conclusion looking back on April. And since aircraft, like corporations in some people’s worldview, are people, my friend, the 737 might need some cheering up.

First, this year’s Collier Trophy Committee (on which I had the pleasure of serving) selected Cirrus’s Vision SF50 as this year’s winner (congratulations to a marvelous and elegant new single engine jet, and to Cirrus Aircraft). This was the second time the 737MAX lost; Boeing is unlikely to submit it again. The MAX will almost certainly be the last 737, so this means the 737 will be one of just two Boeing jetliners not to win the Collier – the 787, 777, and 747 all won; the 757 and 767 had to share their trophy; The 727 and the 737 didn’t. Interestingly, the two that didn’t win were the best-selling Boeings.

The Collier loss was followed by a strange but statistically meaningless series of airline incidents, including Southwest Airlines’ first ever onboard fatality, a woman partially sucked out of a window, destroyed by an engine explosion. This was followed by FAA-mandated engine CFM56-7 engine inspections. None of this means anything, of course – the 737, like all jetliners built today, is the safest form of transport yet devised. But images and headlines persist.

Here’s my 737 appreciation, despite its difficult month, detailing four things that make it remarkable:

1. Longevity. Last year, the 737 hit the half-century mark in production and airline service, and it’s all been on the same type certificate. Boeing did not issue a “50 years in service” press release (another reason the 737 might feel depressed: Boeing didn’t even remember its 50th birthday). Clearly, some at the company feel that a commemoration would call attention to the 737’s middle-age status when they’re promoting the MAX as the latest thing. I disagree. Of course, I’m 54, so I’m going to disagree. But when they designed this plane, they got it right. The 737 is also the best illustration of how aviation has changed in the past half-century: we’re on an aeronautical plateau, with progress mostly coming in engines, avionics, and other subsystems. Looking forward (official Teal forecast): the last 737 will be delivered in 2031. The last 737 will likely be retired in 2067, on the type’s 100th in-service anniversary.

2. Quantity. In March Boeing delivered its 10,000th 737. That’s more than any other jet by a wide margin (although Airbus has delivered 8,000 A320 series jets so far). Boeing holds orders for another 4,700 737s, meaning that total production will exceed any other large plane (B-17 production totaled 12,731, in case you’re wondering, and C-47/DC-3 output was slightly lower). Teal Group’s total production forecast: 16,412 737s.

3. Industry footprint. As you might expect from these numbers, the 737 is tied with the A320 for greatest contributor to aerospace revenue, profit, and employment. At least one major company, Spirit AeroSystems, wouldn’t exist at all without it. The 737 and A320 together

constitute over 25% of all aircraft industry revenues, a figure that will increase as both OEMs move towards rate 60 (and then perhaps rate 70). Since these single aisle jets tend to be used in high cycle operations, it’s a safe bet that their share of aftermarket revenue is even higher. Thus, the biggest ever source of US aerospace industry money, jobs, and exports will never win the Collier Trophy.

4. Safety. Again, all jets built today are very safe. But since 1967 this jet has competed with the family car. In fact, Southwest Airlines, which uses 737s exclusively and now has over 700 of them, was created by Herb Kelleher in part to compete with the family car. If one person dies in an airline accident, it’s headline news, but every year 40,000 people die in traffic accidents on US roads. That’s one 737-200 each day. Worldwide, the figure is 1.3 million traffic deaths per year. This compares with 44 onboard airline fatalities worldwide in 2017. It isn’t unreasonable to say that this plane has saved thousands of lives.

Is the 737 outlook perfect? Not exactly. It faces two challenges:

1. The Large Trunkliner Segment. The 737MAX8 and A320neo look evenly matched. The 737MAX7 and A319neo are equally irrelevant. But the largest MAXs – 9 and 10 – are getting clobbered by the A321neo. The latter has about 2,000 orders, while there are just over 500 known MAX 9/10 orders (more may come from the “undetermined” pile, but this would be at the expense of the MAX8). This disparity will help drive Boeing’s 797/NMA, although it’s far from clear that a twin aisle design can compete effectively against a single aisle like the 321neo (or a likely 322neo). It could be that Boeing is simply at a persistent disadvantage in the 180/220-seat market.

2. The After-MAX. It’s conceivable that the A320neo is followed by another A320 variant. A new composite wing, new engines and avionics (perhaps originating as part of that A322neo program), and other improvements might be all it needs. But for the 737, the MAX is the last stop on the line. The 737’s first problem, above, shows that the market is upgauging, and Boeing’s next single aisle will simply need to be a larger clean-sheet design (if only to accommodate ever-growing engines under its wings). Since 797 will be a twin aisle, it won’t much in common with the new single aisle.

Finally, I thought I’d mention the other Collier candidates this year, other than the 737 and SF50: the Edwards Air Force Base F-35 Integrated Test Force; the NASA/JPL Cassini Project Team; the Perlan Project (a very high altitude glider); TSA, ALPA, and A4A Known Crewmember® and TSA Pre-Check Programs (I personally endorse Pre-Check for travel); U.S. Marine Corps, Office of Naval Research, and Aurora Flight Sciences AACUS Autonomous Helicopter System; Vanilla Aircraft VA001 (an ultra-long endurance UAV); and Zee Aero Division of Kitty Hawk Corporation (a flying car). It was fascinating to hear their presentations, and all did a superb job. And I really loved sitting on the Collier this year, as usual. Despite the 737’s loss.

Yours, ‘Til The 737-TurboLX Program Launch,

Richard Aboulafia