Now China Wants Compensation From Boeing Over 737 MAX

There appears to be no let up on Boeing following two fatal crashes of its 737 Max jetliners with China now demanding compensation over the grounding of the aircraft.

Two of the world’s most populous country’s state-owned airlines, China Southern Airlines Ltd and Air China Ltd said on Wednesday that they want to be compensated for not being able to fly the 737 MAX.

air-china-737-max
Boeing and Air China celebrate the delivery of the airline’s first 737 MAX. Photo:Boeing

A third Chinese airline, China Eastern Airlines Ltd, made a similar request for compensation last month after it had to ground all 15 of its 737 MAX aircraft.

This triple request for compensation comes at a delicate time in Sino-U.S. relations as both countries are involved in a tit for tat trade war that has seen the United States impose a $200 billion tariff on Chinese imports.

These new tariffs now have Washington expecting China to get tough with American companies that do business in China.

China, together with Europe and North America is the biggest purchasers of jet aircraft in the world and is now awaiting a response to its request from the Seattle plane maker.

Civil Aviation Administration of China grounds the 737 MAX

china-eastern-737-max
China Eastern aircraft taking off.Photo: Boeing

Chinese airlines were forced to ground the 737 MAX after the Civil Aviation Administration of China (CAAC) stopped Boeing 737 MAX aircraft from operating in China for an indefinite period.

Citing safety concerns following the crash of Ethiopian Airlines flight number 302 from Addis Ababa on route to Nairobi, Kenya, the plane went down six minutes into the flight killing all 157 passengers and crew.

Five months earlier the same model aircraft operated by Indonesia’s Lion Air crashed shortly after takeoff under similar circumstances killing 189 people.

China takes a hard line

air-china-737-max-seattle
China’s national flag carrier is the first airline in the country to receive the 737 MAX. Photo: Boeing

According to reports in the Washington Post, the Global Times newspaper, a state-run media outlet published an anti-American article that reads:

“We must use punishment and tell the Americans their practice of using concealment and fraud to extract benefits from others, while benefiting themselves, is unfair.”

While talking to Reuters, China aviation expert Li Xiaojin said that:

 “China has grounded 96 aircraft, which is about 4 per cent of its aeroplanes. The grounding causes huge losses for Chinese airlines.”

Li estimates that daily loses could be in the region of 100,000 yuan ($14,469.90) per aircraft.

“The potential costs are huge too. Slower growth in passenger volume across China’s major airports for March and April was largely due to the grounding of 737 MAX jets, according to my calculations,” Li said.

Besides airlines, in China other none U.S. carriers demanding compensation from Boeing include, Ryanair, Turkish Airlines and Flydubai.

The FAA to meet in Dallas

boeing-737-max-being-delivered-to-air-china
737 Max being delivered to Air China. Photo : Boeing

These latest requests for compensation come a day before U.S. Federal Aviation Administration holds a meeting in Dallas to review Boeing’s updated software for the 737 Max.

During the meeting, they will also ask about new proposals for pilot training on the 737 MAX and discuss a possible end to the grounding.

Despite any decision made by the FAA on the safety of the 737 MAX, both China and Europe have their own flight safety regulators and will decide for themselves when they think the 737 MAX is safe to resume flying.

4
Leave a Reply

1 Comment threads
3 Thread replies
0 Followers
 
Most reacted comment
Hottest comment thread
3 Comment authors
newest oldest most voted
Vince

Wonder if China would use the B737max as a leverage in the trade war? If china refuses to lift the groundings, Boeing will not be able to make any delivery to any airlines in china. On top of that, other airlines in the region operating the B737max such as Silkair will not be allowed to operate the aircraft in and out of the country, potentially disrupting airlines operations in the region.
The united states will have nothing in hand for a tit for tat move as the C919 does not have any customer in america.

Mark

If I was China I certainly would! They already play Boeing against Airbus to get a better deal, so why not use their leverage in the matter against the United States.

Frank

Vince – it goes even deeper then that: Remember when Boeing tried to get tariffs slapped on the C-Series and eventually pushed the aircraft into the waiting arms of Airbus? Canada will not jump on the FAA/Boeing bandwagon anytime soon and the airlines have orders for 116 of the jets. Transport Canada is going to require expensive sim training for Max flights, for any pilot that would fly in a Max in Canadian airspace. Some might say, “Big deal – it’s only Canada” Those same people should check out the air corridor from New York to London, which the Max… Read more »

Vince

Frank Yes indeed. Furthermore it is unlikely that the B737max will be making any significant sales in the next couple of years. But you’ve underestimated the power of these political lobbying. Boeing may very well influence the president into taking actions against Canada should there be any such limitations that arises. The american president has long been the best salesman and spokesperson for Boeing. I will not be surprised if he takes on the additional role of the hooligans, bullying others into giving in Boeing the necessary advantage. For all you know, Boeing may be the one lobbying the Trump… Read more »