An Unclear Course for Boeing
Business Expert Predicts “Soul-Searching” for Aircraft Manufacturer After Crashes
Two fatal crashes involving Boeing 737 Max 8 planes have undermined confidence in the popular aircraft line, with countries around the world grounding the planes and airlines scrambling to refund or rebook thousands of customers.
The deaths of 157 people on Ethiopian Airlines Flight 302 on March 10, following the Lion Air Flight 610 crash in October that killed 189 off the coast of Indonesia, also have sparked heavy scrutiny of Boeing’s business practices as well as the oversight role of the Federal Aviation Administration, which waited days longer than many other nations to ground the planes.
Michael Ball, senior associate dean and Dean’s Chair in Management Science in the Robert H. Smith School of Business with a joint appointment in the Institute for Systems Research in the A. James Clark School of Engineering, said much of that scrutiny will focus on pilots’ training on the new Max 8 model.
Boeing wanted to produce the Max 8, its fastest-selling aircraft, without requiring pilots to spend time training extensively, as is standard with a new model, rather than an update.
“That retraining costs the airlines a lot of money,” Ball said. “Aircraft manufacturers must make such tradeoffs all the time, and as the systems become more complex the tradeoffs become more difficult to make.”
Historically, the most common impetus for changes in aviation policy has been aviation disasters, he said. “While I don't think the investigation into the relationship between Boeing and the FAA will lead to a smoking gun indicating major malfeasance, it is likely that quite significant changes will be made in the safety oversight process.”
Ball, the co-director and principal investigator of NEXTOR-II, an eight-university consortium funded by the FAA to carry out aviation operations research, outlined other challenges Boeing faces in the wake of the two crashes:
Fixing the Max 8
The aircraft’s problems, Ball says, appear rooted in software. “Not to minimize the issue, but software can be fixed. It’s not a fundamental issue with the aircraft. There is also the possibility of sensor malfunction, which would represent a more significant problem.” A software fix, he says, likely will take months to complete and thoroughly test. The FAA, meanwhile, has said it has grounded the aircraft until at least May.
Restoring its Reputation
After the second Max 8 crash, news emerged that several pilots had expressed concerns to Boeing about insufficient training on new Max 8 control features. “At Boeing, there should be and will be some soul-searching about this process,” Ball said.
The reputational damage for Boeing, the world’s largest aerospace manufacturer, may linger. Days after the Max 8 grounding, flight-booking website Kayak launched a search feature that allows users to exclude specific plane models from search results. “But over time, that reputational damage will go away,” Ball said.
Stemming the Financial Damage
Globally, about 370 of Max 8s were in operation and nearly 5,000 more were on order when the second plane crashed. “That’s a huge backlog of orders, and that’s not just going to go away,” said Ball. When airlines order aircraft, they put down a big deposit—generally 20 percent on an order priced in millions. Most airlines can’t afford to walk away from that kind of money, nor lose their place in line. Indonesia’s national airline, though, has told Boeing it wants to cancel its order.
There’s also been talk of airlines suing Boeing for time lost on their grounded planes and other expenses related to the Max 8 issues. “That’s a legitimate thing they can sue for,” Ball said.
The Max 8 crashes, the first in Indonesia and the second in Ethiopia, left 346 people dead. Nonetheless, he says, today’s aviation industry is safer than it’s ever been. Go back 30 years, and there were multiple commercial aircraft crashes every year in the United States alone. Today, that’s not the case. The most recent fatal crash in the U.S. was a decade ago. “A lot of that is because of the technology,” Ball said. “Even though planes are getting more complex, and there is this debate about how much control pilots should have versus the technology, the fact is the technology has substantially improved the safety of the systems in the past 30 years. The improvements are dramatic and measurable.”