The ongoing crisis surrounding Boeing's 737 MAX aircraft has inadvertently led to a surge in demand for older planes. The grounding of the 737 MAX, following two fatal crashes in 2018 and 2019 that claimed 346 lives, has left a significant gap in the aviation industry. This has been further exacerbated by the pandemic, which has caused a chronic shortage of aircraft.
.gif)
The Second-Hand Market Thrives
The second-hand market for airplanes is currently booming. Airlines are facing a shortage of approximately 3,000 planes compared to pre-COVID plans due to disruptions caused by the pandemic and other bottlenecks at Boeing and Airbus⁸. The recent mid-air blowout incident has added to the pressures forcing airlines to fly older planes for longer. This situation is expected to persist until at least 2027.
Impact on Boeing's Market Value
The crisis has had a significant impact on Boeing's market value. The company reported its worst annual orders in at least two decades. Deliveries of its planes also slumped to an 11-year low last year. As a result, Boeing lost its title as the world's biggest plane maker to its European rival, Airbus.
High Demand, High Prices
The high demand for older planes has led to an increase in their prices⁸. Airlines are paying higher prices to ensure they have a large enough fleet to keep up with demand. Some airlines are even purchasing the planes they had been renting rather than negotiating lease extensions. This indicates that airlines are aware that the current issues are not going to be resolved anytime soon.
The Silver Lining
While the crisis has undoubtedly caused significant challenges for airlines and lessors waiting for new planes, it has opened a potentially lucrative path for those with older fleets. Maintenance firms are also benefiting from the greater use of older planes, which require more frequent shop visits.
Conclusion
The Boeing 737 MAX crisis has had far-reaching effects on the aviation industry. While it has led to numerous challenges, it has also created opportunities for certain sectors. As the industry navigates this complex landscape, the demand for older planes is expected to remain high for the foreseeable future. This situation underscores the resilience and adaptability of the aviation industry in the face of adversity.