Insight Friday 26 June 2020: FAA Bows to Foreign Regulators on MAX

News: The Seattle Times published a story that the FAA is bowing to the requests of international regulators regarding additional changes to the 737 MAX beyond those identified by the FAA. These include three issues identified by EASA, the European regulator, and one issue identified by Transport Canada. A compromise has apparently been reached through which the aircraft will be allowed to return to service before the additional requirements are completed, but the FAA will mandate they be finished in 2021. The importance of the FAA mandating the changes requested by the international regulatory agencies is the system of reciprocity, in which certification in one country leads to certification in another with only paperwork and fees, rather than a re-certification of the entire airplane. Without the reciprocity system, commercial aircraft would become prohibitively expensive to certify. The three areas identified by the Europeans are the equivalent of the third angle of attack sensor, (whether physical or “synthetic” via software), correcting confusing cockpit warnings, and the erroneous activation of the stick shaker with the inability for pilots to shut it down. The third issue was also of concern to Canada. With the MCAS and other flight control software fixed, the likelihood of a crash is much lower, and the international agencies have determined that it is safe enough to enable Boeing to correct the issues after the aircraft returns to service. This will allow Boeing to once again generate positive cash flow. But the timetable for making the corrections will be short, with requirements for full fleet compliance, including retrofits to existing airplanes, in 2021. Analysis: The Boeing 737 is a hybrid airplane, with one foot firmly in the past given its 1967 introduction into service and old-fashioned hydraulic systems, and the other foot firmly in today’s environment, with advanced flight control systems and “envelope adjustment” software like MCAS that is run by computers to avoid potentially problematic situations. Airbus, by contrast, uses fly-by-wire technology through which the analog inputs from pilots are digitized and sent via computer over wires to actuators that carry out the commands, rather than direct cables and hydraulic systems used by Boeing. While the latter still provides a tactile feel for pilots from their direct contact with the controls, the foreign agencies do not believe that the pilot’s “feel” of the aircraft is an adequate replacement for an additional sensor. On an Airbus, which has three sensors, if one fails, the computer selects data from the two out of three that agree. On a Boeing, with two sensors, the flight computer would need to utilize another sensor or evaluate other systems to determine which is correct. Boeing has such a system, “synthetic airspeed” on every other model jet it produces except for the MAX, with the basic 737 design pre-dating that technology. Had Boeing introduced synthetic airspeed on the MAX, it would have required additional training. But given the contractual penalty clauses of $1 million per airplane if additional training was required, and a large order from Southwest, the thought of half a billion dollars or more in penalty payments quickly ruled out that system. With EASA requiring either an additional sensor or an alternative like synthetic airspeed, Boeing’s initial cost-saving decision has had counterintuitive and extremely expensive results. Insight: The FAA is clearly embarrassed by its certification failure on the MAX, and its conciliatory actions towards requirement foreign regulators want to introduce is a reflection of that failure. The industry cannot afford a regulatory system with a player that ignores the fundamental rules and essentially let the wolf guard the henhouse during the MAX certification. The FAA is fortunate that EASA and Transport Canada aren’t keeping the aircraft grounded longer to fully complete the required modifications to make the aircraft safe under all circumstances. Given the way Boeing ran roughshod over the FAA during the certification of the MAX, changes will be implemented, and international regulators will be looking over the FAAs shoulder on the certification of the 777X. Boeing should expect a more contentious process with fewer grandfathered exemptions when it certifies its next aircraft. With the 737MAX10, Boeing’s latest MAX model still uncertified, it is now clear that the new aircraft will need to meet all of the requirements prior to certification approval. This may delay the entry into service of the MAX10 from early 2021 to late 2021. In today’s market, in which demand for larger models is depressed, that may have a negligible impact on Boeing’s order book. But the skyline could change and delayed deliveries translate to delayed cash flow. The compromise with international regulators will mean that the MAX will likely return to service this year, with test flights in early July. FAA certification will likely take place in September (with international certification shortly thereafter), followed by pilot training and modification of existing aircraft. Thus a return to service in December would be some 20 months after grounding. Saving the reciprocity system is more important than saving face for the FAA. Had the FAA rejected the European requirements on different issues, the international regulatory system could have been irreparably broken. And that is something the industry could not afford. The US used to be the world's leader in aviation safety, with the FAA providing the highest standards in the industry. That simply isn't the case anymore, after the FAA's loss of international credibility with its failure to adequately oversee the development of the MAX. It is time to adjust thinking appropriately.

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