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B787 Grounding- Of Dashed Hopes and Dreams

Photo : Reuters

Air India has grounded the pride of its fleet, its six spanking new Boeing 787 Dreamliners, all less than five months old, early today morning. The move comes after a FAA (Federal Aviation Authority) directive, ordered a halt to all 787 operations around the world. The decision has huge implications for Boeing, airlines and to a lesser extent, passengers. FAA took the call after a series of troubles with the plane. The latest was the failure of the Lithium-ion battery on a Japan Airlines 787 that resulted in heat damage.

So how does the grounding of a few planes impact anyone? Is it like a product recall for a defective car?  Here is a rough guide to whose Dreams are hurt and how.

*Air India’s turnaround Dreams
The 787s are an important part of the Indian flag carrier’s revival (turnaround) plan. The idea hinges around moving to a more fuel-efficient, medium capacity aircraft that is easier to fill. In the nineties, AI went wrong with its earlier choice, the Boeing 777. The airline’s service standards kept falling- and it could rarely fill up the (bigger) planes at the right fares. Most flights were loss-making as a result. Over the last few months, AI has begun using the new 787s on many of these loss-making routes.

The government of India, which owns Air India, has bitter experience of the devastating impact that grounding expensive new aircraft can have. Like Air India now, Indian Airlines was among the launch customers for the A320 in 1989. The entire fleet was grounded after a crash in Bangalore in 1990 killed 92 people. The crash was ascribed initially to problems with the new `fly by wire’ technology, but was later proved to be pilot error resulting in controlled flight into terrain. All the planes had remained grounded for over a year resulting in heavy financial losses for IC, from which the airline never did recover. The big difference is that the grounding had little to do with inherent faults in the A320. The planes were grounded only in India, by the Indian government.

The Air India management is hoping that Boeing will be able to quickly resolve the 787 problems. In many ways, the airline’s recovery hinges on this.

* Boeing’s market domination Dreams
Aviation writers who have tracked the program from its inception, say FAA’s call is devastating for Boeing. The manufacturer is facing the heat from belligerent airlines demanding compensation and threatening cancellations. First deliveries of the plane were delayed for years- the manufacturer had to shell out compensations in the form of discounts to airlines, cutting into its profit margins. Now technical glitches seem to be cropping up faster than they can be tackled. The program was to be Boeing’s big leap in terms of building the components at locations within the United States and outside. Airline sources ascribe some of the problems to this strategy that reduces control over the product.

Boeing’s 787 has created excitement in the aviation industry since the early 2000s when the program was defined. In an era when most twin-enginned aircraft look alike, it is a project that took a step-jump away from convention in terms of the design, the way it was manufactured and many other ways. It marks a big transition of aircraft structures from mainly metals (Aluminum and other alloys) to composites (carbon materials). The lower weight combined with improved wing-design brings higher fuel efficiency. Boeing claims the plane is 20% more fuel efficient than other aircraft of the same size. 850 of the machines have been sold and that cash-strapped airlines have not hesitated to shell out about Rs 1,000 crore (Boeing’s list price is $207m) for each plane.

In some ways, Boeing is treading the same ground that its main rival European airplane maker Airbus walked on in 2011. Airbus had to contend with wing cracks on its own troubled-baby the A380. The big fear for both plane-makers is that customers could cancel orders. In India, Jet Airways has ordered 787s, but a final decision to put down the cash to start building the plane, will only be taken over the next one year. Dozens of other carriers too will review their decisions, based on how Boeing is able to tackle the problems on the plane.

Boeing’s stock price fell on Wednesday. But with all the fire fighting now, that is surely the least of its concerns.

*Passenger Dreams
You Tube is full of hundreds of videos taken by first-time fliers on the Dreamliner. The brag-value of flying the airplane with its huge windows and vastly improved air quality is immense. Only fifty of the planes are in service and most airlines using them charge a premium for the tickets.

Air passengers today fly in one of the safest periods in the history of air travel. 2012 was the safest year, with no hull-loss (major) accidents on western built jets. It wasn’t a freak year either. It was the third consecutive year that the airline industry had a record safety performance. Airline industry body IATA is rightly proud of this. It says its members have had one accident per 5.3 million flights. Putting this in perspective, if you were to take a flight everyday, you could fly for 14,000 years without being in an accident.

FAA’s emergency advisory to ground the planes is clearly one more step to make air travel safer around the world. The all-clear for the Dreamliner’s take off should only be sounded once all its problems are sorted.

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FAA - Federal Aviation Authority - not Airworthiness. Hopefully - and like all our most previous passenger aircraft, this will be short-lived - and the 787 will indeed be the dream aircraft for all of us!
Thanks, change made. Boeing would obviously like to sort this out as soon as possible. The NTSB has taken charge of the burnt batteries as well as the CVR and FDR from Japan Airlines. Here's the latest update http://www.ntsb.gov/news/2013/130114.html
Who compensates Air India for the huge loss incurred?Hope Air India bothers to demand it atleast. Do accidents occur in a linear variation to calculate accordingly considering past performance of safe flying happened.Doesn't hold ground ! By the way,Aviation seems to be the masters subject for this writer!
Thanks for your comment Sandeep. I am sure all the 787 operators are working out their numbers for compensation from Boeing. Many have additional `loss of business' coverage from insurance companies. Though we don't know the amount yet- AI has demanded and received a discount for the delayed delivery of the 787. On your other point- future air-safety cannot be predicted based on past performance, but surely airlines that have a good track record of investment in safety are likely to have fewer incidents.
Who compensates Air India for the huge loss incurred? Do accidents happen in a linear variation to calculate accordingly considering past performance of safe flying happened.Doesn't seem to hold ground !
 
 
Cuckoo Paul
Cuckoo Paul is Senior Associate editor at Forbes India. She spends most of her time looking for interesting business stories. She is biased towards tales of dirty, old-style, brick-and-mortar companies in the oil & gas, power and heavy engineering companies.
She also looks continuously, if somewhat skeptically, over the horizon to examine clean technologies which threaten to change the old order.

Apart from refining margins, her other obsession is with things airborne. She learnt flying on a Piper Super Cub and follows commercial and general aviation keenly. She is also on the board of Childfund India, an NGO that supports about 70,000 children in the country.
 
 
 
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Cuckoo Paul
January 18, 2013 07:54 am by Cuckoo Paul
Thanks, change made. Boeing would obviously like to sort this out as soon as possible. The NTSB has taken charge of the burnt batteries as well as the CVR and FDR from Japan Airlines. Here's the latest update http://www.ntsb.gov/news/2013/130114.html
January 18, 2013 06:40 am by Mahesh Singh
FAA - Federal Aviation Authority - not Airworthiness. Hopefully - and like all our most previous passenger aircraft, this will be short-lived - and the 787 will indeed be the dream aircraft for all of us!
Cuckoo Paul
Cuckoo Paul
January 17, 2013 23:53 pm by Cuckoo Paul
Thanks for your comment Sandeep. I am sure all the 787 operators are working out their numbers for compensation from Boeing. Many have additional `loss of business' coverage from insurance companies. Though we don't know the amount yet- AI has demanded and received a discount for the delayed deliver...
January 17, 2013 20:10 pm by Sandeep
Who compensates Air India for the huge loss incurred?Hope Air India bothers to demand it atleast. Do accidents occur in a linear variation to calculate accordingly considering past performance of safe flying happened.Doesn't hold ground ! By the way,Aviation seems to be the masters subject for th...
January 17, 2013 20:07 pm by Sandeep
Who compensates Air India for the huge loss incurred? Do accidents happen in a linear variation to calculate accordingly considering past performance of safe flying happened.Doesn't seem to hold ground !