Capitol Hill is wading-in on the 737MAX issue and is concentrating its gaze on the US Federal Aviation Administration (FAA). How is it that the MAX Maneuvering Characteristics Augmentation System (MCAS), a critical system, relied on one single Angle of Attack (AOA) sensor with no back-up and why was it not considered an issue during the design and testing phase by Boeing or the FAA during certification? Indeed, US news outlet CNN is reporting that an AOA sensor failure and its impact on MCAS was not tested during the official flight test programme and only tested after the Lion Air crash. If the report is accurate, it suggests that the FAA and Boeing believe that any such failure could be dealt with by trained pilots with ease, or else they would be considering/implementing full simulator testing for all MAX pilots right now.
Yesterday we hinted at the question: What would it take to track Boeing shares lower down to where we all know they should be right now? The answer most likely lies in the negative press attention from large global outlets such as CNN, which is continuing to build. Former Boeing test pilots are quoted on CNN questioning the logic of the Boeing MAX systems and how they got past the FAA.
This mainstream media drive for answers is further politicising this issue and now the House Transportation and Infrastructure Committee Chairman Peter DeFazio is quoted by serval sources as saying that “The committee is investigating Boeing's design and the FAA's certification of the 737 Max and its MCAS system that relied on one AOA sensor… I have questions about whether all of the systems on the 737 MAX were tested and properly certified by the FAA, and this is one of the areas our investigation is exploring.”
The broader industry need to think about this and consider the following. 1) The MAX will not be re-certified any time soon; and 2) If Capitol Hill find that the FAA were at fault in the certification process, do all the aircraft recently certified by the FAA over the past five years or so need to be looked at again?
If serious flaws are found in the FAA certification processes on the MAX then Capitol Hill may ask questions about other aircraft recently certified. It is the first thing Capitol Hill will be asked by the media and the US public, not to mention of course the fact that EASA, China and other jurisdictions will have to look at their own processes again. Some jurisdictions will take this opportunity to scrutinise the FAA processes and force further checks of their own.
Meanwhile it is well worth keeping an eye on Taiwan and China
A combination of increasing labour costs, US sanctions and China’s roll-out of its Social Credit System is causing a mass exodus of Taiwanese companies from mainland China. Over the past 20 years many of the largest Taiwanese conglomerates moved production to mainland China to benefit from the massively reduced labour costs along with other tax incentives that were offered at the time. Remember that “Made in Taiwan” was written over just about everything in the 1980s? Today, it is “Made in China” but for the most part it is still those same Taiwanese companies making the goods, just on mainland China. It is estimated that these companies moving production back to Taiwan will cause around 200,000 job losses in China.
There are a number of conclusions to draw from this, but staying out of politics we might concentrate on the basic fact that this further confirms that China has not been able to keep a lid on wage inflation, which is eroding its manufacturing edge, but at the same time it is lifting many more people into a position of having a disposable income, thus many more aviation customers. Moreover, this also further confirms that China does indeed have a number of problems with its economy and US sanctions to a point are having an impact, but not to the extent that the Social Credit System might cause a flight of talent from the shores of China in the very near future – if not already. What will the effect on lessors be is one very important question to ponder and will Hong Kong eventually be a part of this? I urge all to keep up to date with the realities and effects of the China Social Credit System as it is being under reported but the effects are already being seen prior to full rollout.