More than a month after U.S. regulators cleared the Boeing 737 MAX as safe to fly again, China’s regulators are not ready to do the same—and don’t seem in any hurry to change their minds.
The Chinese regulators, the Civil Aviation Administration of China (CAAC), were the first to ground the jets in March 2019, after a crash in Ethiopia killed 157 people, five months after a crash in Indonesia killed 181 people.
The Chinese have said they have “no set timetable” to complete their process of certifying that the 737 MAX meets their own safety standards after a series of changes made by Boeing and approved by the Federal Aviation Administration.
Beijing has indicated that it needs to be satisfied on three fundamental issues: that the design changes have been proved to be safe and reliable; that a new training regime for pilots better prepares them for handling emergencies; and that the investigations into both crashes are complete and definitive.
“The Chinese don’t have a pressing need to certify the aircraft at the moment,” says John Grant of OAG, aviation analysts who track the world’s airline traffic by the number of seats available every week.
Grant told The Daily Beast that over recent weeks, 2.5 million seats have been removed from domestic Chinese schedules because of the need to discourage travel for the Lunar New Year—which was a superspreader event early in the pandemic last year.
But lower demand is only part of the picture. The fate of the 737 MAX seems now to have become part of a much larger game in which China is exerting its own influence and power in aviation—as well as its future intentions in the standoff between the U.S. and China over trade, tariffs, and technology.
Before the pandemic, China was generating 18 percent of the world’s airline passenger traffic. It’s estimated that beyond the pandemic China will need 7,700 new jets over the next 20 years.
That is by far the most potentially lucrative market for the Boeing-Airbus duopoly that dominates the world supply of jets. Before the pandemic, about one-fifth of jets produced by the two companies went to China.
And Chinese airlines were early enthusiasts for the 737 MAX. Before it was grounded, there were 96 flying in China, a quarter of the worldwide fleet. And there were 200 more orders in the pipeline.
But Boeing’s reputation has been seriously tarnished by revelations about how the company knowingly cut corners on safety, with the complicity of the FAA, to get the new airplane into the air.
Chinese regulators know they can find good reasons to stall their decision. Although the FAA cleared the jet to fly as of January, European regulators have only just done so on the condition that Boeing makes further fixes—a demand echoed by airline pilots, including Capt. Sully Sullenberger, as I have previously reported.
For decades, the world’s regulators were content to accept that the FAA was the gold standard for airline safety. That is no longer true, as a result of the MAX fiasco. The Chinese demonstrated their new and confident independence by triggering the grounding and are now doing so again by keeping it in place.
The 737 MAX disaster has also clearly accelerated China’s plans to end its dependency on Boeing and Airbus. It’s developing its first single-aisle jet, the C919, as a direct competitor of the 737 and the Airbus A320—superficially it has the appearance of an A320 clone.
Years ago, Airbus established a strong position in China by agreeing to do something that Boeing has always resisted: setting up a plant there to assemble the A320s ordered by Chinese airlines. This led to worries that Beijing was getting an open door to a free technology transfer through hands-on access to Airbus production skills.
For example, back in 2018, then-Vice President Mike Pence was warning of deals that were, in fact, examples of a “forced technology transfer” by Beijing.
That was, however, largely a misplaced fear.
Proprietary secrets in the airliner business tend to be buried deep in legacy science, particular to each plane-maker and not easily detectable or replicable. And, in fact, many essential parts of the C919 come from beyond China: The engines are jointly produced by America’s GE and the French company Safran; GE also partners with a Chinese company to produce the avionics, as does Honeywell with the flight controls and other systems.
There is no room for protectionism and hermetic nationalism in commercial airplane design. All modern jets are flying assemblies of multinational parts.
That’s why China’s strategy in using the grounding of the 737 MAX as leverage in technology and trade negotiations with the U.S. may well turn out to be a weak hand. The reality is that when the C919 finally reaches airlines, some time in the next three years, despite its many foreign parts, it will be more similar to yesterday’s Airbus A320, not tomorrow’s.
Aviation analysts I have spoken to expect that Chinese airlines will be forced to buy it, whether they really want it or not, and that it will be perfectly safe but less efficient and more costly to operate than the 737 MAX or Airbus series of jets. Eventually, though, nobody doubts that China will become a real player (they are also working with Russia to develop a larger jet).
The Biden administration has already indicated that it will be clear-eyed and hard-nosed in its trade and technology negotiations with China, without the unpredictability and impulsively transactional style that Trump favored. But they know as well that the stakes are high for both sides.
China will be an important market for new jets for decades and Airbus, representing formidable pan-European talents, is in a strong position to provide those jets—much stronger now because of Boeing’s seriously eroded reputation and the stigma attached to the 737 MAX. It now seems possible that the 50/50 split in the duopoly’s market share will become 60/40 in favor of Airbus.
What makes fixing this urgent for the U.S. is Boeing’s significant place in our labor market. According to The Economist, one in 130 of all American workers are employed either directly by Boeing or by the 12,000 companies in its supply chain. And these are all well-paid and skilled jobs.
Boeing’s management isn’t doing much to help. David Calhoun, the CEO, has been on the board for more than 10 years and boss for more than a year. A long series of serious missteps has happened on his watch and continue to happen.
Only a week ago, the company announced its largest losses ever, $11.9 billion for 2020. An astonishing $140 billion in shareholder value has been wiped out in just two years.
But perhaps the most alarming detail in the company’s report was a $6.5 billion writeoff for the program for Boeing’s newest jet, the 777X. This is the world’s largest twin-engine airliner, designed as a far more efficient replacement for the two jumbo jets, Boeing’s now-retired 747 and the Airbus A380 that is no longer being produced.
A serious flaw was exposed in the control system of the 777X. This revelation was so sudden that it gobsmacked a group of aviation journalists who, only two weeks earlier, had been given an inside look at the flight testing in progress of the first 777Xs off the production line and at that point heard nothing but optimism.
The company revealed few details but referred opaquely to “an updated assessment of global certification requirements.” It’s been clear for some time that the 777X has been subjected to a level of scrutiny by the FAA safety inspectors that is far more rigorous than was applied to the 737 MAX and that the agency is determined to recover its reputation as the last line of defense against flaws in Boeing’s own safety regime.
In a recent podcast by Aviation Week’s most seasoned reporters, it was suggested that the investigators had uncovered a potential “single-point failure”—exactly the kind of flaw involved in the two 737 MAX disasters, where one defective part has no backup and can alone trigger a sequence that ends in a crash. If so, that is truly shocking.
The 777X flight test program was about to move to its next stage, where the FAA inspectors begin monitoring the tests using a checklist that has to be completed before they certify the airplane as safe. Those flights have now been delayed and the 777X will not be fit to fly passengers for at least another three years.
This not only indicates that Calhoun’s days at Boeing are numbered. It must also raise insistent questions about Boeing’s standards of corporate governance and why, throughout a series of catastrophic management decisions, no single executive has ever been held publicly accountable.
