UA is dumping the -500s as they become due for required checks as a result of the -500 being costly to operate on a per seat basis as compared to the -300.
The -500 requires the same staffing with nearly similar fuel burns as the -300 while generating 16 seats less worth of revenue.
Any range advantage the smaller -500 might have over the -300 does not matter in UA
's case as the 737s are not generally scheduled for routes in excess of the 2-3hour range. A matter of fact the cost disadvantage of the -500 increase the longer the flight segments are.
In addition Gordon Bethune of Continental was recently quoted as stating he would love to get rid of the CO
's 50+ B737-500 fleets as the aircraft were similarly expensive to operate.
Soon you'll also notice that Southwest is moving its -500 fleet to many of the inter Texas routes replacing the -200s. As the aircraft has a higher seat cost than the companies -300, keeping them on short routes within the Lone Star state makes financial sense. Previously much of the -500 flying was within the California corridor.
This is the exact same reason why Boeing has found it difficult to market the B737NG -600 model. If anything the -500 and -600 are more special purpose aircraft for specific market needs.
[Edited 2004-11-24 08:09:10]