THE workhorse of Australia's domestic airline industry, the Boeing 737, is set to dominate skies until well into the next two decades as its US manufacturer puts on the backburner plans to develop a more fuel-efficient replacement for the aircraft.

The manufacturer told Bloomberg yesterday that it was studying new "product enhancements" because replacement plans for the 737 aircraft have been delayed toward the end of the next decade.

It is the strongest indication yet that Boeing will stick with the 737, the world's most widely flown aircraft, despite having worked on research for a replacement for years.

The US manufacturer is also likely to be less inclined to move quickly towards finding a replacement because the 737 remains a top seller.

Trumpeted as the "best-selling jet airline of all time", Boeing has delivered almost 6000 737s since they began rolling off production lines in 1967.

The manufacturer has also been embarrassed by repeated delays to its Dreamliner 787 program, of which Qantas is the second-largest customer.

However, the prospect of the 737 remaining the backbone of airline fleets around the world for years to come will dampen the hopes of the environmental movement that the industry can greatly reduce carbon emissions.

It will also be of concern to airlines conscious of the need for more fuel efficient aircraft over the next decade to ensure their profitability. Despite a sudden drop in oil prices over the past five months, higher jet fuel prices are set to dog the industry in the longer term.

The magazine Aviation and the Environment has cited sources saying Boeing is considering a "bridge" model for the 737 that would burn 10 per cent less fuel until a replacement aircraft is pressed into service.

Boeing has never given a timetable for a replacement or what its specifications would be. The 737 is still Qantas's favoured aircraft, making up almost a third of the group's fleet of about 224 planes across its domestic and international operations.

The airline plans to buy up to 188 narrow bodied aircraft for its short-haul fleet over the next decade for routes in Australia and Asia.

Qantas has firm orders for 31 737-800s, and an option for 49 more. Boeing's rival Airbus will provide the rest; the airline has firm orders for 68 A320 and A321 aircraft, and an option for 40 more.

Virgin Blue's fleet is also highly reliant on the 737s - including 22 737-700s and 38 737-800s - and it is due to take delivery of a further 19 737-800s by 2013.