Does the FAA Love Boeing Unreasonably Much?

Following news that Boeing (NYSE:BA) sent Dreamliner planes into the sky once again, airline industry observers worry that the relationship between the airline and the FAA is getting too close for passengers’ comfort. The Dreamliner fleet has been grounded across the world for months due to serious safety hazards presented by lithium batteries on board. In the opinion of many insiders, the solution Boeing presented is no up to snuff.

James E. Hall’s recent Op-ed in the New York Times points out serious dangers of the system in place for airline industry safety standards. For one thing, Hall notes that airlines are allowed to choose which employee within the company is responsible for certifying a plane is up to code. Prior to 2005, that selection was made by the FAA (even though it was still an employee of the manufacturer).

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In the words of Hall, the “slide to self-certification” officially began with the FAA’s 2005 policy change. Aircraft manufacturers obviously have safety in their best interests. If a plane crashes, all eyes go first to the plane’s crew and second to the manufacturer. Yet in Boeing’s Dreamliner planes, many consider the policy towards its flammable lithium batteries far too lax. Meanwhile, financial accountability is nonexistent…

Boeing CEO Jim McNerney said there were no contractual obligations to companies forced to ground Dreamliners, though the company would consider offering discounts on maintenance and future orders from airlines in the future. In other words, they will have to live with the defective planes Boeing produced and sold to them.

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Certainly, that presents airline passengers with less than optimal conditions. If there are no efforts other than the precautions taken by Boeing employees, the clear loser is the consumer. Hall writes that the savings generated by the switch from FAA-designation to self-selection saved the airline industry $25 million over a ten-year period. Stacked up against the $81 billion in earnings clocked by Boeing in 2012, it seems like a case of industry coziness in the extreme. Those hoping for a change in policy will need to count on this highly preoccupied Congress making it. In other words, don’t hold your breath.

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