Wednesday, January 18, 2017

How the Boeing 737 MAX will cut costs and open new routes for Southwest Airlines

The Boeing 737 MAX will cut costs and open new routes for Southwest Airlines when the Dallas-based carrier begins flying the Chicago-based manufacturer's latest and greatest narrow-body later this year.

Southwest Airlines has placed 170 firm orders with Boeing for the 737 MAX 8, which has the same 175-seat capacity as the 737-800s that Southwest flies today, said Steve Jenkinson, who manages Southwest’s Boeing 737 MAX program.

The airline also has 30 firm orders for 737 MAX 7s, which have 150 seats and will replace the 143-seat 737-300s that will be phased out of Southwest’s fleet by Oct. 1.

At a price of $110 million, the Boeing 737 MAX 8 is $31 million more expensive than a new Boeing 737-800.

But the 737 MAX 8 can fly farther than the 737-800, it’s 14 percent more fuel efficient, and it has a quieter engine, Jenkinson said.

“They can fly approximately 500 nautical miles farther than the 800s,” Jenkinson said. “That’s all dependent on aircraft configuration and loads. That’s what we expect from a performance perspective.”

“The range opens up new possibilities of markets,” he added. “Those won’t be announced until later this year.”

Southwest CEO Gary Kelly has said the 737 MAX could make about a half dozen South American destinations feasible, including Bogota, Colombia.

Jenkinson said it’s too soon for Southwest to quantify how much the savings may reduce seat-mile costs.

The MAX is expected to be 99.9-percent reliable from a dispatch perspective, which will reduce costs at the gates, Jenkinson added. That, too, can’t be quantified until a large number of the new planes are in service, he said.

Because Southwest’s fleet is all 737s, the carrier will continue save money because most of the parts are the same and the training necessary to fly, maintain and fix the planes will be similar, he said.

“The MAXes have 80-percent parts commonality with the current 800,” he said. “That’s cost and efficiency that makes up the Southwest model.”

In the big picture, Southwest is following the worldwide market trend. A commercial aviation market forecast from Boeing shows strong demand to replace older and less fuel-efficient airplanes between now and 2032.

Of 35,280 new airplanes to be delivered worldwide by 2032, about 24,670 will be single-aisled aircraft with 90 to 230 seats, such as the 737 MAX series, Boeing’s forecast shows.

About 2,020 will be smaller regional jets, with fewer than 90 seats. A projected 4,530 airplanes to be delivered by 2032 will be “small wide-body” planes with 200 to 300 seats, 3,300 will be medium wide-body planes with 300 to 400 seats, and 760 will be large wide-body aircraft with 400-plus seats, the forecast says.

Boeing has more than 3,600 firm orders for the 737 MAX series. The 737 MAX first flew in January 2016, nearly 49 years after the maiden flight of the 737 in April 1967.

In October, the 737 MAX underwent some of its most intense round of flight testing to date. The MAX was taken to several of the airports in Southwest’s system to simulate the conditions the plane will encounter in commercial service.

Over a six-day period, pilots from Southwest and Boeing flew routes from Love Field in Dallas to cities including Albuquerque, Denver, Chicago, Austin and Phoenix. Southwest’s maintenance and ground crews at each airport got hands-on experience with tasks ranging from towing and fueling the airplane to testing ground support equipment and performing maintenance.

The goal was to show the MAX is ready to enter service this year when it starts delivering to Southwest and other customers, said Keith Leverkuhn, vice president and general manager of Boeing's 737 Max project.

“There have been times when the reliability of aircraft going into service has not been what the airlines have expected,” Leverkuhn said in a video Boeing made about the testing.

“Our mission is to make sure there are no surprises, no secrets, and that we know exactly how the aircraft is going to operate,” he said.

(Bill Hethcock - Dallas Business Journal)

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