Fatal crashes in Indonesia last October and in Ethiopia in March killed 346 people and led to the worldwide grounding of Boeing’s new 737 Max aircraft, of which nearly 400 were in service. This is a disaster for Boeing, not just because of the shocking fatalities but because it looks like the common cause was a design flaw in the plane, the latest version of the best-selling short-haul aircraft ever produced.

Relatives of those killed in the second crash are naturally asking why the plane was not grounded by Boeing after the first, since it is now clear that an uncorrected design feature which caused the first crash also caused the second.

Without the two crashes, Boeing would have manufactured and sold several thousand of these aircraft in the years ahead – the order book stood at 4,600 units prior to the grounding even though the first commercial flight was just two years ago. These planes, even with the discounts attaching to large orders, would have earned Boeing at least $500bn over the next six or seven years – they cost over $100m a pop.

One of the biggest customers was to be Ryanair which intended to introduce the model to regular service before the end of this year. The plan was to replace a large portion of Ryanair’s current fleet, consisting entirely of earlier 737 variants, with the new 737 Max, which has better fuel economy and other superior features.

The commercial aircraft market, dominated by Boeing and Airbus, is sensitive to passenger perceptions of airliner safety. Two crashes in quick succession for a new model, both apparently due to the same design defect, has not happened to a major manufacturer since the 1950s. It means a major crisis for the plane-maker but also for the regulatory agency which issued the airworthiness certificate.

The 737 Max was certified by the US Federal Aviation Administration (FAA) and there have been allegations that the agency was lax and too intimate with Boeing.

The US Congress is conducting inquiries and neither Boeing nor the FAA are coming up roses.

The BBC’s Panorama programme covered the issue last Monday evening, screening some scary accounts of how the design of the 737 Max came to be certified.

Airlines have been deferring and cancelling orders and they will be making big compensation claims against Boeing.

Carriers which had pencilled in deliveries of the new aircraft (Boeing had planned to manufacture 52 per month) have already had to curtail their schedules and are postponing the planned retirement of older planes. If production and delivery of the Max had continued as planned, there is a good chance you would have been flying in one before long.

The fall-out is not confined to Boeing, its customers and the US regulator, the FAA. In Europe, the national aviation regulators have pooled their operations in an EU body called the European Aviation Safety Agency (EASA).

All aircraft and aircraft components manufactured in Europe are certified under EASA oversight and the reputation of this body is a selling point for Airbus, based in Toulouse and the main worldwide competitor for Boeing.

Any European country with an aerospace industry derives benefit from the regulatory umbrella provided by EASA and the value of that umbrella has been enhanced because of the 737 Max grounding. One country with a substantial aerospace industry is the United Kingdom. The wings for Airbus models are manufactured by British Aerospace in Wales and Rolls-Royce, based in Derby, is one of the world’s leading manufacturers of aircraft engines, destined for both Boeing and Airbus models.

Britain’s imminent departure from the EU means that these companies, and their many suppliers, will have to somehow retain access to certification by EASA – the alternative would be to establish (or re-establish) a UK certification capacity from scratch which is impractical. There are fears some UK production facilities could eventually re-locate.

Additional problems

Boeing faces problems additional to the sharp fall in the share price and the blip in production and sales. Even if the aircraft is re-certified to fly, which may not happen until early next year, the US Department of Justice has launched a criminal investigation covering design issues, the integrity of the certification process and the reluctance of Boeing to ground the plane after the first crash in Indonesia. The regulator is also facing investigation and people could end up in jail – such things happen in America.

The Max crisis could turn out better for the airlines. Several have been reporting losses or reduced earnings and there are complaints about over-capacity, especially in Europe.

There could be several hundred new aircraft missing from next year’s short-haul fleet in Europe because of Boeing’s production delays and airlines will be hoping for reduced capacity and less pressure on fares.

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