Boeing’s entire global fleet of 737 Max jets was grounded Wednesday when Canada and the United States joined dozens of other countries and closed the skies to the aircraft.
Both Canada and the U.S. cited similarities between the Ethiopian Airlines crash on Sunday, which killed 157, and a Lion Air accident that killed 189 people in Indonesia in October. Both involved the 737 Max aircraft.
Canada’s Transport Minister Marc Garneau said his department compared satellite tracking data from the crashes. Similarities between the flights’ vertical fluctuations – both crashed minutes after take off and pilots reported flight control problems – crossed a threshold that prompted him to issue a safety notice.
Garneau said there was a worrying correlation between the crashes. In certain circumstances, the planes’ systems try to tilt their noses down, contrary to the efforts of pilots — a pattern that was seen in both flights before they crashed.
“I would repeat once again that this is not the proof that this is the same root problem,” he emphasized. “It could be something else.”
The “safety notice” means none of the aircraft can fly into, out of, or over Canada.
Hours later, the U.S. Federal Aviation Authority (FAA) gave the similar reasons for closing American airspace to the jets.
“Evidence we found on the ground made it even more likely that the flight path was very close to Lion Air’s,” said Daniel Elwell, the acting head of the FAA.
President Donald Trump announced an emergency order to ground the planes saying he “didn’t want to take any chances.”
“The safety of the American people and all people is our paramount concern,” Trump said.
The move will disrupt travel for tens of thousands of passengers.
“For a week or two, it will be bedlam and chaos,” said Marvin Ryder, an assistant professor of marketing at McMaster University.
Canadian and American authorities previously stood behind the safety of Boeing’s single-aisle jet even as their global counterparts closed their airspace to the jets.
Ethiopia Airlines said it plans to send the black box to European authorities for analysis, raising questions about whether the FAA still commands trust around the world as the go-to for aviation safety.
The financial impact of the groundings remains unclear for carriers including Air Canada and WestJet Airlines, but the decision will affect dozens of daily flights carrying thousands of people across Canada. Researchers have estimated the daily cost of grounding the entire fleet will top US $17 million globally.
In a statement, Boeing CEO Dennis Muilenburg supported the decision to ground the planes.
“We are supporting this proactive step out of an abundance of caution,” Muilenburg said.
“We are doing everything we can to understand the cause of the accidents in partnership with the investigators, deploy safety enhancements and help ensure this does not happen again.”
Earlier this week, Boeing announced plans to upgrade the software across the entire Max fleet. In February, theWall Street Journalreported the software upgrade was delayed by the U.S. government shutdown.
There are 371 Boeing 737 Max 8 and 9 planes in operation by more than 50 airlines around the world. Approximately 5,000 more have been ordered. The planes are built in Washington State, although some of the parts including the engine inlet inner barrel are manufactured in Winnipeg at a facility with 1,400 employees. Boeing did not respond to questions about whether the groundings are expected to affect orders or manufacturing.
Boeing’s three largest customers for the 737 Max fleet are Southwest Airlines, American Airlines and Air Canada.
Air Canada, which operates 24 Boeing 737 Max 8 planes, and WestJet, which operates 13, both issued statements supporting the government’s decision to ground the planes even as they stood by their safety records.
The vast majority of flights will go ahead as scheduled as the Boeing model represents about six per cent of Air Canada’s fleet and seven per cent of WestJet’s. But both airlines braced customers for delays as they work to rebook thousands of customers with fees being waived.
“Given the magnitude of our 737 operations, which on average carry nine to twelve thousand customers per day, customers can expect delays in rebooking and in reaching Air Canada’s Call Centres,” Air Canada said in a statement.
Air Canada flies about 75 daily flights on this particular plane out of a total 1,600 flights on 400 aircraft. WestJet flies 35 daily flights on the jet.
WestJet said it did not immediately ground the planes after the second crash due to the model’s safety record. It has operated more than 9,000 flights carrying more than 1.3 million passengers on the Boeing 737 Max aircraft since it entered WestJet’s fleet in October 2017.
For a week or two, it will be bedlam and chaos
Both airlines said it was too soon to say whether they would seek compensation from Boeing for the disruption. Norwegian Air Shuttle SAS, however, has already called on Boeing to foot the bill for the groundings.
Carriers may need to acquire short-term leased aircraft to move all their passengers, said AirTrav Inc. president Robert Kokonis.
“If it is decisively found that Boeing is at fault, I believe both carriers should follow the lead of Norwegian and quickly demand compensation for any additional costs and losses,” Kokonis said in an email.
The financial impact would be entirely dependent on the length of the grounding, National Bank analyst Cameron Doerksen noted to clients. The cost should be manageable for Canada’s top two airlines since it was not peak season and both airlines were affected, so there was no competitive advantage.
“We believe that the 737 MAX grounding will be short-lived and we also believe that the concerns around the 737 MAX’s safety will be addressed successfully,” he wrote.
WestJet’s stock price fell 1.6 per cent to $19.62 on Wednesday, while Air Canada’s dropped just two cents to $32.02. After two days of steep losses, Boeing’s stock closed up 0.5 per cent at US $374.14.