Boeing Max crisis opens door for regulator competition

Two deadly crashes have undermined the credibility of the US Federal Aviation Authority, analysts say

A Boeing 737 Max 8 airplane lands following a test flight at Boeing Field in Seattle, Washington, US. AP

Since its creation more than six decades ago, the US Federal Aviation Administration has cemented a reputation as the arbiter of flight safety, with regulators around the world routinely adopting its approvals. In the wake of two deadly incidents with Boeing’s latest 737 Max model, that order was turned on its head.

Right after the second crash, which left 157 people dead in Ethiopia on March 10, China took the lead in suspending the Max. A worldwide cascade of bans followed. The FAA was the notable holdout for several days until it declared that the US would also stop all flights, a humbling about-face for the American agency.

The agency’s effort to rebuild its stature reaches a pivotal moment Thursday when it convenes a meeting in Texas for global regulators - including those of China, the European Union, Canada and Brazil - to review plans to get the plane airborne again. The Max’s grounding is now entering its 10th week.

“Today, the FAA and Boeing have zero credibility after the Max crashes,” said Mohan Ranganathan, an aviation consultant and former pilot based in the southern Indian city of Chennai. “Europe and China will definitely take the lead in breaking the American hold.”

Defiance of the FAA showed a rare lack of coordination in an industry that has worked to unify processes such as airworthiness approvals and air-traffic control. The confusion handed China - soon to unseat the US as the world’s largest aviation market - a powerful voice as the FAA struggles with allegations that serious design flaws on the Max weren’t properly detected or disclosed.

We'd really like to see some transparency and for Boeing and the FAA to take responsibility for what's happened.

Texas Meeting

The gathering in Fort Worth, Texas, is likely to feel the pull of competing forces: A technical discussion on the surface, interlaced with political and financial considerations as governments try to strike a balance between holding the FAA and Boeing accountable and keeping their people safe, while getting the latest model of the world’s most widely flown plane back in business.

Even before the meeting kicks off, some regulators are suggesting that any return to operation won’t be swift because they’ll want to run their own vetting processes first. The FAA said the purpose of the gathering is to “work with technical experts from other civil aviation authorities to address specific concerns related to the 737 Max”.

In another sign of push-back against the FAA and Boeing’s traditional lead role in such matters, executives from some of the world’s largest airlines are also gathering on Thursday - for a private meeting in Canada to discuss 737 Max issues.

Image Tested

Acting administrator Daniel Elwell acknowledged in testimony to Congress that the swift groundings of the jet around the world had tested the agency’s image.

“Internationally, we are collaborative 99 per cent of the time,” Mr Elwell told the House aviation subcommittee on May 15. “When the Ethiopian accident happened, it was not a collaborative process from Sunday night till Wednesday morning, despite our best efforts and attempts to have conversations. I know countries act and they act for various reasons.’’

At the heart of the 737 Max issue is a stabilising software that may have contributed to its deadly descent in Ethiopia and, five months earlier in Indonesia. Both crashes occurred shortly after takeoff. Boeing said on May 16 that the Max had successfully performed 207 flights with a software upgrade. Once a full package is adopted, the FAA will schedule a flight test by its pilots.

That may not be enough to appease some critics.

“We’d really like to see some transparency and for Boeing and the FAA to take responsibility for what’s happened,” said Jon Horne, the president of the European Cockpit Association, a Brussels-based pilot lobby. “At the moment, there’s still an awful amount behind closed doors.”

Boeing spokesman Chaz Bickers said the company has been working with US, European and other global regulators on the process for certifying the updated software, “along with the associated enhanced pilot training and education that will help prevent accidents like these from ever happening again”.

China’s Options

China’s response to the Boeing crisis, in particular, is a complicated maneuver. By the mid-2020s, the nation will displace the US as the world’s largest aviation market, the International Air Transport Association estimates. A growing number of newly mobile Chinese citizens are creating huge demand for aircraft. Its airlines, most of which are state-owned, have received more than 2,000 Boeing jets to date, double the number half a decade ago.

No other country has greater demand for aircraft: In the 20 years through 2037, Boeing estimates Chinese purchases at 7,690 new planes worth $1.2 trillion.

In aircraft manufacturing, however, China is a bit player in an industry firmly locked in the duopoly of Boeing and Airbus SE. While state-owned Comac’s C919 had its maiden flight in May 2017, that plane is years from being a commercial proposition. So regulators in the U.S. and Europe remain the global pace-setters.

Duopoly Power

The Boeing crisis comes at a difficult moment in US-China relations. The trade war is intensifying, though China has so far refrained from extending tariffs to its orders of Boeing aircraft. (Chinese airlines made up about 20 per cent of 737 Max deliveries worldwide through January, according to Boeing.)

No other country has greater demand for aircraft: In the 20 years through 2037, Boeing estimates Chinese purchases at 7,690 new planes worth $1.2 trillion.

China is well versed in the language of business diplomacy. In 2017, Airbus was locked in a standoff with Beijing, which was slow-walking certification of the A320neo model because of what analysts at Bernstein described as a “mini trade war” as the Chinese agency sought recognition as a certifying authority in Europe. A bilateral safety agreement came into effect just this week, strengthening China’s global role because its jets will face less scrutiny in the European market.

No Turning Back

The FAA, too, is keen on these accords. The agency signed agreements with regulators in Singapore, Brazil, China and with the European Aviation Safety Agency in the last two years.

Airbus chief executive Guillaume Faury cautioned on May 16 that the industry shouldn’t dial back its collaborative approach, despite what he called “a lot of tension and a lot of questioning from authorities” in the wake of the Boeing crash.

“It’s very important that we have one system when it comes to safety of aviation,” Mr Faury said at a briefing in London. “This has led to a continuous increase in safety and a continuous increase in standards.”

How regulators approach the next steps for the 737 Max will test the industry’s appetite for collaboration. Europe and Canada have both said they want to conduct independent studies before letting the Boeing plane fly again.

Some authorities have turned much more negative. Indonesia may keep the aircraft grounded until next year in the wake of the crash there, director general of civil aviation Polana Pramesti said. Two of the nation’s carriers are among the biggest customers of the aircraft.

“Boeing has to be able to assure us, the regulators, that the aircraft is safe,” Ms Pramesti said in an interview on May 20. “They also have to regain confidence from the pilots and the airlines, then educate Indonesian customers. I cannot say whether we will keep using the aircraft or not.”

That tough stance risks eroding the global detente among regulators, an outcome that Alexandre de Juniac, director general of IATA, says would hurt the entire industry.

“Competition between regulators would be detrimental,” Mr de Juniac, whose organisation represents more than 280 carriers, said in Paris this month. Airlines want to “avoid each model being certified 1,000 times”.