Boeing's Unethical Practices - PDF

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Executive Summary
During the last two years, two Boeing 737 Max 8 airplanes have crashed shortly after their
take off. The first place crashed near Jakarta on October 28, 2018. The second crashed near
Addis Ababa, Ethiopia on March 10, 2019. The crashes took away the lives of 346 innocent
passengers as well as the crew members (Rhodes, 2019). As observed from the black box
data of the crashed planes, it is indicated that unethical practices as well as the bad
engineering practices and plane design was the resign behind both the plane crashes. Both the
calamities were caused due to the faulty sensor which repeatedly made the nose of the plane
to push downwards. Soon after the crashes, FAA i.e. the Federal Aviation Administration
ordered an emergency grounding of all the Boeing 737 Max planes.
The paper discusses the unethical behaviour of the Boeing that claimed many lives. If reports
are to be believed, Boeing used to charge extra for their relatively simple as well as cheap
warning displays in the cockpit through which pilots are alerted about any divergent sensor
readings. Therefore, the use of the relatively cheap displays shows how unethical the
practices of Boeing were. As a result, the aviation as well as the tourism industry is at a high
risk of losing their customers and visitors after such calamities and disasters (Rhodes, 2019).
It has been observed that significant number of people all over the world have developed fear
of getting into the plane after these deadly crashes.
The grounding of the planes have impacted the tourism industry to a certain limit. However,
the most affected are the airlines that used to use Boeing planes for their carrier flights. It has
been observed that among all the airlines the most affected are the Southwest Airlines that
have the maximum number of Boeing Max aircrafts as compared to all the other US airlines.
In order to continue to operate and to fly in future, Boeing need to restore the trust of the
public by making improvements in its software and its Max fleet. Boeing needs to make
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efforts in order to reassure the public by giving specific software training to their pilots.
Therefore the paper will discuss the recommendations for the Boeing in order to resume its
services and return back to sky again.
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Introduction
The recent air accidents that involved two Boeing 737 Max 8 planes have raised safety
concerns among the passengers all over the world. One Boeing 737 Max 8 plane, Lion Air
flight 610 crashed in Indonesia on October 29, 2018 shortly after its take off and took away
the lives of almost 189 on board. In the similar manner, another Boeing 737 Max 8 plane,
Ethiopian Airlines flight 302 crashed in Ethiopia on March 10, 2019 that resulted in almost
157 fatalities (Rhodes, 2019). As per the investigations, it has been observed that pilots had
experienced some navigation errors as well as problems with the aircraft’s airspeed and angle
sensors on the same aircraft the previous day. This has raised the concern about the safety of
the passengers and the air travel. Also, it has been observed that the pilots were not provided
adequate training about the new software and the new designs and hence the pilots did not
possess adequate knowledge about how automation would respond under specific
circumstances. This led to these two fatal crashes which claimed almost 346 lives. As a
result, FAA as well as China and European Union together took the decision to ground the
services of the Boeing 737 Max 8 airplanes until the errors are fixed and the safety of the
passengers is ensured. This was followed by the official order from the American President
who announced that FAA should issue the grounding orders of the Boeing 737 Max 8 fleet on
the urgent basis.
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Analysis
The following section provides an insight into the various causes of the unethical behaviour
of the Boeing 737 Max Fleets that resulted in two deadly plane crashes and the impacts these
crashes had on the Boeing’s reputation, its share prices, the public confidence as well as on
the tourism on the whole. Based on the analysis, it will be decided that whether or not the
Boeing should be allowed to fly.
Impact on the Boeing’s reputation
The crashes of two Boeing 737 Max 8 are the perfect example to show what impact does the
business ethics have on the life of the stakeholders and how companies can tarnish their
reputation by focusing on only “profits”. After the two Boeing 737 Max 8 planes crashed in
Indonesia as well as Ethiopia, the aviation authorities grounded the Boeing’s jets all over the
world that has been flying all over the world as the most fuel efficient fleet (Costa, 2019).
Thousands of Boeing 737 Max 8 models have been grounded on the grounds of the
uncertainties regarding its safety. After the terrorist attacks of 9/11. This has been the highest
level of flights grounded.
After the crashes, Boeing is estimated to have lost almost 40$ billion in the stock market
(Joseph, 2019). The crashes have proved to be extremely damaging for the Boeing’s
reputation among the pilots, passengers as well as the airlines. The impact of the crashes and
its unethical behaviour are likely to remain for long term and hence it might take time for
Boeing to restore the trust of its passengers and the safety regulators. Due to the impact on its
reputation, the aircraft lost many orders for the very first time in the three decades. In
addition to 737 Max 8 models, the cancellations orders even included 787 Dreamliners (BBC,
2019). Since 2007, the Boeing has delivered the lowest number of commercial airplanes.
Impact on the public confidence
The recent crashes that involved two Boeing 737 Max 8 airplanes have raised concerns over
the safety of the aircraft as well as the safety of the passengers travelling through the airlines.
The crashes have resulted in the loss of the passengers trust on the Boeing 737 aircrafts. It has
been observed that almost 70% of the air passengers hesitate to book the Max aircrafts.
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Moreover, it has been observed from reports that public would rather wait for the 737 Max
aircraft to fly safely for at least six months before booking their max tickets.
Also, as observed by Atmosphere Research Group, 40% of public would rather prefer
booking a more expensive or longer-connecting flights instead of flying through Boeing 737
Max aircrafts. The American Airlines have even allowed their passengers to change or switch
their flight in case they do not want to travel through Max aircrafts. However, airlines do
switch their aircrafts before prior intimation depending on the weather issues or mechanical
issues. So even if the passenger does not want to fly through Max, there are slight chances
that Max 737 is used by the airline at the last moment.
Before the fatal Boeing accidents, the public does not used to care about what aircraft they
are travelling on, but after the crashes, they have become more concerned towards the type of
the aircraft being used. The reactions of the travellers on social media claims that passengers
have tried to switch their flights and get their Boeing flight changed and at the same time, the
passengers all over the world have also pressurised the safety authorities to ground the
Boeing 737 Max 8 planes before the security assurance is restored (BBC, 2019). Boeing
needs to reinter into the market and that too with the flawless introduction in order to gain the
confidence of its passengers and their loyalty.
Due to the lost public confidence in the Boeing 737, United airlines as well as Southeast
airlines provide their passengers with the fare differences in case the passenger wants to
change the flight as they do not force their travellers to board Boeing 737 Max and hence
provide them the switch option. As observed by Global Business Travel Association, it has
been found that almost 60% of the airline employees have expressed their concern about
flying on Max aircrafts and the similar has been the case with the passengers as well. Many
of the airlines expects that almost 2/3rd of the passengers would likely to change their flights
before the final take off.
Hence, the crashes certainly risks losing the passengers and their trust on the airlines. It has
been observed that Humans do have the fear of flying and the occurrence of such deadly
crashes only increase such fears. The news of the airplane crashes trigger the fears of the
humans about flying and this results in the loss of business for the other airlines as well.
Hence, in order to operate again and to regain the trust of the public, Boeing needs to assure
its passengers that its aircrafts are safe. This can be done by assuring the safety of the aircraft
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to the government and safety regulators so that majority of the airlines starts flying with their
planes.
Impact on the share prices of Boeing
Boeing has been operating as an aerospace giant due to its fuel efficient aircrafts and
therefore has been remained a darling of the American stock market. The share prices of the
Boeing has tripled over the last three years. It was listed as the America’s best stock
performer in the year 2017. However, the two consecutive crashes of Boeing 737 Max 8
with-in the time period of five months have led to the grounding of the aircraft all across the
globe and this has resulted in the wiping of almost a tenth of its stock capitalisation which is
almost equivalent to $25 billion .
The company has seen a significant decrease in its market value which is almost $11 billion
within just two days of making a decision of continuing with the production of the aircrafts
that has been grounded after the two fatal air accidents.
Although 737 Max alone generates almost one third of the Boeing’s total revenues and hence
contributes to almost half of its total annual profits. But the grounding of the aircraft has
caused significant financial damage to the Boeing which could cost around €300 m. The
shares of the Boeing have fallen to approximately 23% since the crashes. However, the
Boeing shown signs of recovery and its timely return in the market by sharing the news that
737 Max would be allowed to fly again by the end of the year 2019 but the news was
dismissed by FAA by calling it unrealistic. The return of the aircraft is unclear since then and
hence the Boeing has decided to halt its production process for the time being in order to
reduce the impact on its financial position.
Impact on tourism
Being an aerospace giant, Boeing plays a significant role in the tourism aviation and hence
the grounding of the aircrafts can have a significant impact on its profits as well as the
tourism on the whole. The crashes of the two Boeing 737 Max 8 planes have most of the
tourism operators all over the world reluctant to book orders with Boeing again until the
safety regulators allow the plane to fly again.
The impact of the Boeing crashes is limited on the tourism. Almost 350 Boeing 737 Max 8
planes are in use all over the world and the airlines that have purchased their aircrafts have
successfully shifted their passengers to other planes in order to accommodate the groundings.
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Therefore, the tourism industry has not experienced much impact from the grounding
decision of the Boeing 737 Max 8 fleet. However, the impact has been significant on the
Norwegian’s entire providence, Rhode Island Airport as most of the flights were 737 Max 8
all of which have been grounded and this has ultimately re-routed the passengers to fly out to
Stewart Airport in New York so as to shift to 787 Dreamliner.
Thus, based on the above analysis it can be said that Boeing’s 737 Max 8 should not be
allowed to fly again with its defective and highly controversial MCAS automated flight
control system. The safety regulators need to remove the automated system from the 737
Max 8 planes before the planes are allowed to operate again. In order to be able to operate
again, the Boeing’s 737 Max 8 will have to get their planes ready after checking all the plane
systems including engines, tires, sensors etc. The aircraft needs to reinstall the software
systems in order to ensure the safety of the aircraft and to provide proper training to its pilots
to handle properly the new automated software system. This can signal the return of the
Boeing in the aerospace.
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Conclusion
To conclude, business ethics play a critical role in the life and death of the stakeholders
involved and is not limited to only tax frauds or breaking laws. This can be well understood
from the unethical behaviour of the Boeing’s 737 Max 8 that crashed consecutively within
the time period of 5 months claiming almost 369 lives of the innocent people including crew
members. Therefore it is required that business giants like Boeing, who deals with thousands
of lives on the daily basis, need to apply high business ethics standards and therefore need to
make decisions that are not merely based on making profits but also to preserve the public
confidence as well as the image of the business in the market. The investigations so far only
indicates that the fatal crash accidents of Boeing that took away the lives of 346 people and
crew members is the result of the business rivalry and the interest in gaining the maximum
market share as well as profits. It made the Boeing to behave that their new planes are same
in design as their previous ones and therefore it does not require additional training and costs
but the truth was far from it.
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Recommendations
In order to return to the sky, the following are the recommendations for the Boeing 737 Max
aircrafts:
1. Software updates and Flight tests
In order to fly again, Boeing needs to finalise the updates to its flight control software,
followed by a certification of the test flight. However, the FAA is not going to give the green
signal to its services until November this year. It is required that Boeing as well as FAA
pilots do test the updated software for at least few months and these tests must be completed
before FAA approves the aircraft to return back to service.
2. Pilot Training: FAA needs to reissue the U.S pilot training requirements to Boeing in
order to inform what kind of training must be provided to pilots before the passengers fly
on 737 Max 8 again. In addition to this, the pilots must be provided with short term
computer based training so as to get aware of the new software working. However, this
might take few longer but in order to ensure the safety of the passengers, the adequate
training to passengers is critical and is therefore highly recommended.
3. Certification:
After finalising the software updates, test flights as well as pilot training, the Boeing should
approach the FAA for the certification which might take up-to 30 days before the planes are
allowed by FAA to fly again. The safety of the planes must be ensured to FAA in order to get
the final certification.
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