The Economics That Made Boeing Build the 737 Max
The infamous 737 Max is now grounded and considered a liability, but this was not always the case. What made Boeing design this particular airplane?
Wendover Production explains the economics behind this ill-fated airplane in this video. Part of the reason is that airlines would rather have a cheap small plane than an expensive super efficient small plane.
The 737 is just that: a cheap small plane. Priced at just $89 million, the now doomed plane was considered a great deal.
This is because Boeing had perfected the 737 manufacturing process and could, therefore, offer a cost-efficient deal on the planes. It was estimated that at their peak Boeing was making one 737 every fourteen hours. Talk about a lot of planes!
However, at some point, airlines started to change how they used their fleet and had begun using planes like the 737 for longer and longer flights. In addition, in 2011, jet fuels had reached an all-time high so fuel efficiency was key for the airlines.
Then in December 2011, Boeing's competition Airbus announced the re-engined A 320 Neo. Unfortunately for Boeing that model sold very well.
Airlines wanted a small efficient plane. On July 2011, American airlines then announced a massive order of Boeing's redesigned 737.
But at this point, the new 737 had not been announced. So Boeing was essentially pushed in producing this re-engined 737. If you want to know the reasons why and what happened after, you need to watch the video. We will give you a hint: it has to do with the cost of training pilots.
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