The 717 was the last jetliner developed by McDonnell Douglas before Boeing acquired the company 18 years ago. Delta, Hawaiian Holdings, Spain’s Volotea and Australia’s Qantas Airways are all ready to pounce if a used 717 comes onto a market.
Nine years after production ended for Boeing’s 717 jetliner, the former sales dud is one of the most sought-after aircraft in the world.
Boeing built just 155 of the 100-seaters, and most are near the age when airlines start thinking about a trade-in. But valuations and lease rates are soaring thanks to a mix of cheap fuel, Boeing’s $1.5 billion bet on ensuring the model stays in service and Delta Air Lines’ decision to use the plane as a replacement for its smallest regional jets.
Delta, Hawaiian Holdings, Spain’s Volotea and Australia’s Qantas Airways are all ready to pounce if a used 717 comes onto a market that now has none to buy or rent. Their only current prospect: a plane parked in Turkmenistan, according to FlightGlobal’s Ascend database.
“Everyone’s in them for the long haul,” said Daniel Pietrzak, Delta’s managing director for fleet transactions. “They look brand-new. They’re great.”
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The 717’s surprise resurgence bucks the usual trajectory of orphan aircraft, which rarely gain popularity once assembly lines shut down. Instead, global demand has outstripped supply since Delta started assembling a large and growing fleet in 2012, taking advantage of favorable rental terms and a drop in jet-kerosene prices that makes older planes attractive.
Values have risen more than 17 percent this year, to range from $7.5 million to $10.5 million, while lease rates soared 22 percent after bidders jumped in when Sweden’s SAS put nine planes on the market, according to Ascend. Delta got three, Qantas took two and four went to budget carrier Volotea.
“It’s one of those types that to one airline may be worth nothing, but to another that flies a fleet of them it’s worth a lot,” said George Dimitroff, Ascend’s head of valuations.
The 717 was the last jetliner developed by McDonnell Douglas before Boeing acquired the company 18 years ago. As the plane debuted in 1999, airlines already were tilting away from short-haul 100-seaters in favor of bigger jets packing in more travelers.
“It’s a very good aircraft,” said Jonathan Bogaard, a shareholder at Vedder Price and a founding member of the law firm’s global transportation finance team. “It just never caught on.”
Boeing still provides 717 engineering and spare-parts support, which is common. More unusual: It owns 103 of the aircraft and holds operating leases worth about $1.5 billion, filings show. It helped find new homes for 717s as operators dropped the model.
“We’re part of the market and that helps us stay close to the operators of our airplanes,” said Beth Notari, a manager with Boeing Capital Corp.
Carriers like the 717’s performance on shorter flights, and the five-abreast cabin layout, with only one middle seat per row, is popular with travelers. Still, the 717 wasn’t a hot commodity until Delta — known for spotting value in used planes — decided the model could replace cramped, 50-seat regional jets. It’s flying them on its Los Angeles-San Francisco route, among others.
Delta acquired 88 of the aircraft from Southwest Airlines, which got them when it bought AirTran Holdings but didn’t want to alter an all-737 fleet.
The 717 market could deflate just as quickly if Delta loses interest, said Nick Popovich, president of Sage-Popovich, which specializes in aircraft-asset management.