Allegiant Air’s order for 50 Boeing 737 Max aircraft in December comes at a particularly pivotal time for the jetliner duopoly. Airbus leads the narrowbody race. With over 8,500 orders of its A320neo and A220 families, Airbus maintains a formidable lead over Boeing at just north of 6,100 orders for its 737 Max.
This comes as no surprise given the almost two-year grounding of the Max and a one-year head-start in sales for the Neo, combined with an airline operational bias toward longer-range single-aisle aircraft with the A321neo.
Related: Allegiant is adapting the 737 Max to its business model
Through the grounding of the 737 Max and the onset of the pandemic, Airbus continued to sell A320neo family aircraft while Boeing’s narrowbody fell further behind. Yet, despite Airbus’s lead and the challenges to the Max program through 2019 and 2020, Boeing mounted a strong comeback in 2021 with the help of its most strategic customers.
In the first full year since Boeing’s 737 Max reentered service, Boeing sold more of the type than Airbus’s competing, and market share-leading A320 platform. According to each manufacturer’s published gross order tally for 2021, the 737 Max bested Airbus’s A320 by selling 749 737s versus 526 A320s for the year.
The reasons for an airline to choose one aircraft over another are complex. Far beyond price, the variables when choosing an aircraft include reliability, compatibility with an existing fleet, range, performance, earnings potential, maintenance intervals, spare parts availability, deposits, customer support, and delivery timing, to name a few. Yet, with the current disparity in market share between the 737 Max and its A320 competitors, it is the delivery timing that demands a closer look.
A backlog with available delivery slots is both a curse and a blessing. On one hand, available slots represent unsold aircraft — a ticking clock approaching the build start date. Few things are as expensive as building an airplane without a customer and their pre-delivery payments. However, the slot also represents value to an airline looking for aircraft. The sooner the availability, the sooner the aircraft can begin earning revenue for the airline.
TAC Analysis continues its look inside the recent Allegiant Air order for 50 737 Max aircraft which provides a textbook case of how early deliveries can bring value to an airline, tipping the balance in the favor of the manufacturer which has not sold as many aircraft. It is through the context of this order that we consider the value of earlier arriving aircraft, and how a duopoly provides a strategically protective cushion for the market share laggard.Continue Reading...
Three points: Exhausted Gulf pilots, Wisk’s pilotless ambition, United’s new academy
A backlog with available delivery slots is both a curse and a blessing, And that’s...