Appraisal: Boeing 737-700

The Boeing 737-700 holds a distinctive place in modern commercial aviation. Introduced in the late 1990s as part of Boeing’s Next Generation (NG) family, it offered greater range, advanced avionics and improved efficiency relative to the Boeing 737 Classics. The B737-700’s first flight was in February 1997 and marked the debut of the NG series, which was later expanded with the -600, -800 and -900 variants. Southwest Airlines launched the 737-700 in 1998.

Fleet and Operations

As of September 2025, the 737-700 remains most prevalent in North America, with nearly 477 active aircraft — the majority operated by Southwest. Asia accounts for 135 units, followed by Latin America (45) and Europe (31). Globally, about 12.5% of the fleet is in storage. The 737-700 has seating between 126 and 149 passengers, with a range up to 3,440 nautical miles. The B737NG’s sole engine source is the reliable CFM56-7B turbofan. The B737-700 is capable of dense short-haul operations while retaining flexibility for select medium-haul routes. The 737-700’s size made it ideal for thinner markets on medium to long-range routes. Beyond commercial service, the airframe also found success in specialized roles, such as the Boeing Business Jet (BBJ), which was introduced in 1998.

Market Shift and Conversion

The 737-700 accumulated 1,287 deliveries, with production winding down by 2018 and the final aircraft delivered in 2020. As newer-generation aircraft have entered service, operators are gradually phasing out NGs. Southwest, the largest operator, plans to retire its NG fleet by 2031 in favor of an all-MAX operation, while other carriers — including Delta, Air Canada, Air France and JetBlue — have transitioned to the Airbus A220. United, WestJet and Copa have also started to retire their NG fleets, transitioning to Boeing MAX 8 for standardization of fleet, to fulfill parts demands and to take advantage of current market conditions.

To date, the 737-700NG has seen only limited traction in the passenger-to-freighter market compared with the far more popular 737-800NG. While conversion programs are offered by IAI Bedek, PEMCO and AEI, fewer than 50 737-700s had been converted by mid-2025, versus more than 260 737-800 freighters already in service and a pipeline exceeding 300 aircraft. Although conversion costs for the -700 (US$4-5 million) are slightly lower than for the -800 (US$5-6 million), the -700’s reduced payload and pallet capacity limit cost-effectiveness.

Boeing’s World Air Cargo Forecast and IATA cargo outlooks highlight that future narrowbody freighter demand will be more on high-volume types such as the 737-800, leaving the 737-700 as a secondary, niche option.

Market Dynamics

Boeing’s continued certification delays for the 737 MAX 7 have created an opportunity for other aircraft in the sub-150-seat segment, such as the Airbus A220, to gain momentum. At the same time, these certification and production delays — combined with the MAX grounding — have extended the operating life of the 737-700 longer than originally planned. Airlines prioritizing fuel efficiency and passenger comfort increasingly view the A220 as the most viable replacement option for aging 737-700s in the near term; however, Airbus faces production and pricing constraints that limit the A220’s ability to fully displace the 737-700 or undermine the long-term business case for the MAX 7 once certified. As a result, the 737-700 remains relevant as a bridging asset, sustaining its short-term utility.

On the secondary market, the B737-700 has experienced structural depreciation. Appraisal analysis indicates that although values have stabilized somewhat since pandemic lows, the 737-700 remains a “sunset asset” with limited long-term demand outside of a small number of conversions. Lease rates continue to soften as lessors and airlines prioritize newer, more efficient narrowbodies.

Maintenance and Support

From a maintenance standpoint, the 737-700 continues to benefit from the scale of the broader 737NG family. Independent and airline-affiliated providers ranging from AAR and ST Engineering to Lufthansa Technik and Turkish Technic offer heavy check and component repair and overhaul services worldwide, supported by robust supply chains and spare-parts pools. This breadth of service helps ensure good geographic coverage and reliable turnaround times. The CFM56-7B engine further reinforces this advantage, with more than 40 licensed overhaul shops worldwide and a vast installed base. Retirements are generating abundant used serviceable material, reducing demand for fresh shop visits. As the 737-700 fleet ages, heavy checks and major engine shop visits increasingly exceed the residual value of the aircraft, driving earlier retirements or conversions. While passenger MRO demand is expected to decline sharply after 2027, there will likely be an increased focus on freighter conversions that could boost the second-life options for some older B737-700s.

Market Outlook

As the 737-700 exits frontline fleets, its future lies less in mainline passenger service and more in secondary roles. Freighter conversions will sustain the type’s relevance well into the 2030s. Its versatility ensures it will remain a visible, if smaller, part of aviation. With Boeing expected to provide 737NG airframe support well into the 2040s, and CFM committed to sustaining the CFM56-7B engine through at least that time frame, operators can rely on continued OEM and aftermarket backing for many years yet.