The Debacle that is Boeing
What Boeing’s Struggles Teach US About Capitalism and Government
This essay was written by Will Arrington. Will is an advisor to Civic Way with a Bachelor of Arts in Political Science from the University of North Carolina at Chapel Hill. Will, a former Peace Corps volunteer, works in Washington DC.
Political drama runs wild every election year, but this year it has been particularly cringeworthy. A once-in-a-generation deal on border security collapsed, mostly because partisan politicians wanted to deny one side a win. The Homeland Security Secretary is impeached for failing to fix a system that only Congress can fix. Even pop sensation Taylor Swift is accused of being a CIA plant.
Meanwhile, real issues are ignored even though our nation can fix them. Another example of our problem-solving ineptitude was showcased in the skies over Portland, Oregon in early January.
Several dozen passengers and crew on an Alaskan Airlines flight faced sheer terror when a door flew off the fuselage shortly after takeoff. Miraculously, nobody was killed or seriously injured. Still the incident sparked public outrage at Boeing, the maker of the plane in question.
The plane was a 737-Max, an aircraft that is no stranger to controversy. Two deadly crashes shortly after its official launch forced the grounding of aircraft for several months, seriously damaging Boeing’s reputation. The recent door incident, and a finding of missing bolts, led to the grounding of all 737-Max planes for three weeks, costing Boeing an estimated loss $150 million.
Sadly, given what we continue to learn about Boeing, this incident will probably not be the last involving a Boeing plane. Which begs the question: how did our nation reach the point where our civilian aircraft industry no longer produces the safest possible commercial aircraft?
Boeing is the world’s second largest commercial aircraft manufacturer, after Airbus. The two conglomerates are the only major manufacturers of commercial aircraft. This gives both enterprises major stakes in the direction aircraft design takes. Boeing is also one of the largest manufacturers of military aircraft, weapons and systems, for which it receives substantial government funding.
Former Boeing employees at all levels have noted that Boeing’s focus shifted from being an internationally acclaimed engineering firm known for quality and innovation to a business based on maximizing share value and profits. The firm’s longstanding culture of quality gave way to one of greed and cutting corners.
This shift may have originated from the 1997 merger with McDonnell Douglass, a large company with a substantial portfolio of federal military and space projects. Boeing increased its emphasis on Defense Department projects. Its decision to move its corporate headquarters from Seattle to Chicago also shook company morale and alienated the Seattle-based manufacturing wing.
The 737-Max epitomized this shift. Instead of creating an innovative new plane to replace the aging 737, Boeing ordered its engineers to build an upgraded 737 with bigger engines and greater passenger capacity. The result? A plane designed with mechanical shortcomings, dangerous shortcuts and complex software updates. Coupled with inadequate training, a catastrophic failure was almost inevitable. That it happened twice before the plane was grounded is appalling.
Other recent developments have reinforced the narrative of Boeing’s ineptitude. Another near miss in New Zealand where a 787 Dreamliner nearly plunged out of the sky. Delayed shipments of the 787 Dreamliner in 2023 due to quality concerns raised by the FAA. 33 failed audits related to the 737-Max production process. Dubious outsourcing choices like Spirit AeroSystems which failed multiple FAA audits (one cited the use of dish soap to help seal an airlock door).
And the bad news keeps coming. A whistleblower recently revealed substantial issues with the 787-Dreamliner, prompting fears of another potential crash. Not surprisingly, Boeing’s stock has plunged in value and the company has announced CEO Dave Calhoun’s departure at the end of 2024.
Boeing’s misfortunes are clear, but what responsibility does the government bear? Quite a bit, actually. Regulators since the 1950s have given increasing responsibility for safety and quality inspections to major airlines and aircraft manufacturers. Boeing has taken great advantage of this, effectively becoming a self-reporting agency to the government.
Woefully inadequate FAA oversight undoubtedly enabled Boeing to bypass regulations in the development of the 737-MAX. FAA chairman Michael Whitaker recently stated that changes had to be made to federal oversight of Boeing. However, he refused to call for the elimination of self-regulation at Boeing.
Indeed, Boeing has been accused of having an inappropriate relationship with the government for years. The Export-Import Bank of the United States, which oversees financing for overseas ventures, has been one of the largest creditors to interested parties looking to buy planes from Boeing. This has helped finance a massive demand for the 737-Max. As such, the FAA has been accused of treating Boeing as a customer instead of an object of scrutiny.
In addition, the Justice Department has failed to examine Boeing’s monopoly status. Boeing’s dominance over production of American planes grants it undue power in the airline industry. While Boeing does not operate a commercial airline, virtually all American airlines depend on Boeing for their planes and maintenance of those planes.
Case in point, Southwest and United have announced a pause in hiring pilots, partly related to the delays in delivery of new planes and have started looking to import far more expensive products from Airbus to alleviate the delays. Such dependence has made Boeing an extremely powerful player in an industry in which it lacks sufficient operational experience.
Recently, a judge blocked the merger between Spirit Airlines and JetBlue, primarily because no other airline could reasonably fill the demand for low-cost flights. This constraint is largely attributable to a shortage of planes from, you guessed it, Boeing. The ruling effectively means that growth for any new airline company is nigh-on impossible in today’s conditions because of supply chain dominance by Boeing. Yet, Boeing continues to grow richer while the average consumer suffers.
So, what can and should the federal government do to ensure that our civilian aircraft industry produces the safest possible commercial aircraft?
First, the FAA should scrap self-oversight at Boeing, or at the least significantly revamp it, to ensure that proper safety measures are in place. This would greatly increase both the actual safety of the planes and public confidence in aviation.
The government also could step in and demand more oversight of Boeing’s military contracts. Billions are wasted on weapons projects that end up going nowhere. An audit of the usage and usefulness of those projects would reveal which projects can be scrapped. The manpower freed up by that scrapping could be direct towards alleviating the overburdened civilian division of Boeing.
To ensure Boeing adheres to safety regulations, a regulatory oversight committee should be established. If a violation is found, substantial fines should be levied. Lawsuits related to deaths caused by safety violations on planes should receive more substantial aid from the Department of Justice. While a larger conversation about military spending is needed, Congress can elect to remove expensive (and profitable) military projects from Boeing as a coercive device.
Second, once the backlog for planes is met or at least significantly reduced, the Justice Department should examine whether Boeing should be treated as a monopoly and broken up. Its four divisions effectively already operate as separate entities, so individual examination of those entities would probably be needed. A breakup, while admittedly a daunting prospect for the aviation industry, would in the long run be more beneficial to the average citizen.
In short, there are many options for Congress to deal with the disaster that has become Boeing.
Bipartisan anger could be turned into action, Reimplementation of effective government regulation and an end to self-regulation. Giving the FAA the teeth and funds it needs to do its job. A Justice Department with the resources and will to pursue the breakup of conglomerates such as Boeing. A reemphasis on competition in industry, so that one company cannot dominate the aviation industry. A dissociation of civilian aircraft manufacturing from military aircraft manufacturing, so that one cannot receive more emphasis than the other in the same company.
Unfortunately, current leadership seems more distracted with spectacle, bloat and sound bites and less concerned with significant safety risks to the nearly three million people that fly in the United States every day. Whether that attitude changes, and whether significant reforms are implemented to prevent another tragedy remains to be seen. One can only hope that it doesn’t take another disaster to convince Congress (and the public) that drastic reforms at Boeing and across the aviation industry are needed.