At last month's Singapore Airshow, Boeing executives discussed the 200-280-seat segment as a potential market for the company's next new jet. Airbus also has examined a new jet in this class. There are valid reasons to believe this will be the next new jetliner that one or both companies pursue, and that it will open a pivotal battleground.

Consider the market. Boeing built 1,049 757s, including 55 stretched -300 variants. Of these, 978 are still in service, according to the Airline Monitor. There have been more retirements of Boeing 737NGs than 757s, even though the latter jets are much older. Retrofit work on 757s, most notably to install range-extending winglets, has provided solid business, and it's quite likely these planes will be used to a relatively advanced age.

Several factors contributed to the 757 line's shutdown in 2005. As major U.S. carriers moved toward faster turnaround times and more frequent departures at hubs, their needs skewed to smaller jets. At the same time, European charter operators with 757s fell prey to low-cost carriers using Airbus A320s and 737s. And Boeing, under serious profit pressure, was desperate to control costs by moving toward a simpler product line with fewer models.

But a lot has changed since 2005. Long-term demand for a jet in its class is strong, particularly for China's domestic market. Other new growth drivers include low-cost carrier expansion and North Atlantic market fragmentation: United and other carriers are successfully using 757s to serve new city-pairs.

Since a 757 replacement would likely be larger and more capable—probably with 210-240 seats and a 4,000-5,000-nm range—it would also go after the Airbus A300/A310 and Boeing 767 segment. More than 1,500 of these aircraft are still in service. Given the demand and projected system growth ahead, a larger 757 series could see sales of 2,000-4,000 over 20 years.

What would compete with a new jet in this class? The reengined 321neo and largest 737 MAX (now called the 737-9) can't match the range and payload. The Airbus A350 and Boeing 787 are optimized for much longer ranges and carry very large wings and other structures, making them less appealing for 3,000-4,000-nm routes. Boeing's shorter-range 787-3 was canceled in 2010, and the orderbook for Airbus's A350-800 has been cut by more than half over the last year.

A market opportunity like this offers strong profits, particularly if only one manufacturer pursues it. But a launch by either Airbus or Boeing is unlikely until current twin-aisles and reengined singles have been brought to market. That means a 2017-19 launch at the earliest, with a service entry in 2022-24.

Airbus could follow the path Boeing took when it created the 757: take an existing single-aisle fuselage, add a new wing and engines and perhaps more powerful geared turbofans. Rather than try to find the cash to develop a 400-plus-seat twin-aisle jet to compete with Boeing's 777-9X, why not spend less and dominate the entire 200-280-seat segment? A product lineup from the 321neo to a new 230-seat jet to a reengined A330-200 would mount a seamless attack on the market. It would also take advantage of current product introduction timing, since the last A350 variant will arrive by 2017, while Boeing will still be working on the 777-8X until 2022.

For its part, Boeing could pursue a next-generation 757 using MAX technology and new engines. A relatively quick, off-the-shelf solution also represents a useful fallback plan for Boeing in the event 737-9 sales continue to lag A321neo sales.

In terms of technical characteristics—twin- versus single-aisle, composite versus metal primary structure—this new aircraft is far from defined. Would it have a relatively straightforward design, or use emerging new technologies such as out-of-autoclave composites, ultra-high-bypass engines or even a radically new airframe design?

Both manufacturers face a dilemma. If one seizes the up-front demand with a derivative jet, it risks being outmatched by an all-new and innovative design optimized for this segment 3-6 years later. Alternatively, if one pursues the high-tech approach, it might find that its competitor runs away with very strong up-front demand, while the new-technology model fails to command higher prices or sales.

Planners at both jetmakers are likely working overtime on customer requirements and timing for a jet in this class, while simultaneously examining technology roadmaps for relevant new features, subsystems and materials. After all, the two players in a duopoly can't ignore a market vacuum.

Contributing columnist Richard Aboulafia is vice president of analysis at the Teal Group. He is based in Washington.