Airlines are expected to cut summer flying due to delayed deliveries of the Boeing 737 Max, potentially driving up airfare to cover the lost revenue.
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Customers may soon feel the impact of the Boeing 737 Max blowout as airlines face uncertainty about their future fleets.
At a JP Morgan conference on Tuesday, executives from US carriers, including Alaska Airlines, Delta Air Lines, Southwest Airlines, and United Airlines, opened up about the effect on their businesses' bottom line as Boeing slows production of its best-selling airliner.
Bloomberg reported the CEOs shared similar stories about the delays, noting one of the biggest concerns is the abrupt change in expected Max deliveries and how that could affect airline ticket prices.
Southwest revealed it will only receive 46 of the previously planned 79 Max 8 variants it hoped to get this year, representing a 42% decrease, Bloomberg reported. The airline also said it doesn't expect to receive any of the yet-to-be-certified Max 7s this year and removed them from its 2024 plan.
Similarly, United CEO Scott Kirby said in January that the company will build an "alternative plan" for its fleet that doesn't include the Max 10, Boeing's other uncertified Max variant. At the JPMorgan event, he told Boeing to stop making the Max 10 for the airline — of which United has ordered 150 — in favor of Max 9s as continued delays leave the fate of the program in limbo, Bloomberg reported.
Delta Air Lines CEO Ed Bastian also expressed doubt over the Max 10 timeline. It ordered 30 of the planes in July 2022 as it hoped to grow its domestic network. According to Bloomberg, Bastian said the jet could now be delivered as late as 2027 — seven years after the Max 10 was initially expected to enter the market.
Alaska, the airline involved in the Max 9 blowout, said at the event that its schedule is "in flux" as it evaluates Boeing's production stall.
All of these concerns lead down the same road: Fewer available aircraft means airlines are forced to cut summer flying, likely resulting in higher airfare to make up for the lost revenue.
"It's a simple matter of supply and demand," aviation analyst Richard Aboulafia told Business Insider on Wednesday. "With new aircraft production heavily constrained, especially at Boeing, and a limited number of older aircraft that can be kept longer in service, and continued very strong demand, prices are likely to increase."
Michael O'Leary, the CEO of European low-cost airline Ryanair, is already warning of this reality at his carrier, saying passengers would see "slightly higher airfares" this summer due to Max delivery delays.
Travel analyst Henry Harteveldt told BI on Wednesday that airlines are likely to capitalize on this year's strong demand and "limit the number of seats sold at the lowest price points" for peak summer travel.
"Presuming the US economy holds steady, between the delays in new aircraft deliveries — from both Boeing and Airbus — and the Airbus aircraft grounded due to engine problems, travelers may see higher-than-expected summer season airfares," he explained, referring to Airbus grounding of some of its A320 planes due to defects in the engines that will affect aircraft availability through 2026.
Low-cost competition from the likes of Frontier Airlines and Spirit Airlines, however, will prompt the majors to offer "deeply discounted — but heavily restricted — 'basic economy' fares on some flights," Harteveldt said, which could help travelers save money.
"If possible, try to travel at off-peak times — for example, before mid-June or after mid-August," Harteveldt offered as advice to more frugal travelers flying this summer. "Memorial Day and July 4 are always popular times to travel. If your schedule allows, try to travel a few days before or after those holiday weekends."
Airbus
In a scramble to find more planes, airlines could opt for remedies like aircraft leasing or buying up Airbus jets — the world's only other major planemaker.
While Southwest, Ryanair, and Alaska only operate Boeing aircraft and are less likely to jump manufacturers — with Alaska just recently retiring its last A321neo in March 2023 — Delta and United have more flexibility in their diverse fleets.
Delta has been deploying the Airbus A321, for example, while Kirby has been in talks with Airbus to buy more A321neos in lieu of Max 10s at United, Reuters reported.
However, the European planemaker is already so bottlenecked that it cannot physically manage the global demand for airliners — putting the industry between a rock and a hard place. Its order backlog reached about 8,600 passenger planes by the end of 2023.
