Garuda Indonesia seeks to cancel order for 49 Boeing Max 8s
By NINIEK KARMINI
Friday, March 22
JAKARTA, Indonesia (AP) — In a blow for Boeing, Indonesia’s flag carrier is seeking the cancellation of a multibillion dollar order for 49 of the manufacturer’s 737 Max 8 jets, citing a loss of confidence after two crashes in the past six months.
It is the first announcement of a cancellation since Boeing’s new model aircraft were grounded following fatal crashes in Indonesia and Ethiopia.
PT Garuda Indonesia, which had ordered 50 Max 8 jets in 2014 and had received just one plane last year, has sent a letter to Boeing last week requesting to cancel the order worth $4.9 billion, the company’s spokesman Ikhsan Rosan said Friday. The carrier has so far paid Boeing about $26 million for the order.
Garuda joined other airlines worldwide in grounding its one Max 8 jet after the crash of an Ethiopian Airlines flight this month which killed all 157 people aboard. It came less than five months after 189 people died in the Oct. 29 crash of another Max 8, operated by Indonesian private carrier Lion Air.
“Passengers always ask what type of plane they will fly as they have lost trust and confidence in the Max 8 jet,” Rosan told The Associated Press, “This would harm our business.”
He said that Garuda plans to meet with Boeing representatives next week in Jakarta to discuss details of cancelling the order.
“We don’t want to use Max jets … but maybe will consider switching it with another Boeing model of plane,” Rosan said. He said Indonesian passengers are afraid to take flights using any Max model, whether it’s the 8, 9 or 10 series.
A preliminary report from Indonesia’s National Transportation Safety Committee in December stopped short of declaring a probable cause of the Oct. 29 crash.
Officials have provided scant details since then, saying they are still analyzing data from a cockpit voice recorder that was only recovered from the sea in January.
Meanwhile, in Europe, Polish national carrier PLL LOT said it was considering asking for financial compensation from Boeing or even a delay to deliveries of purchased 737 Max 8 aircraft after the planes were grounded globally following the crash in Ethiopia.
In a statement to The Associated Press on Friday, LOT said it would wait for communications from Boeing and flight regulators on whether to put the Max 8 planes back into service. LOT has five 737 Max 8 planes and is to receive nine more this year. Its total fleet counts over 80 aircraft.
Another Polish carrier, charter airline EnterAir, said Friday it would also seek damages. It has two Max 8 planes and has placed orders for another four.
Earlier this month, Norwegian Air Shuttles said it would seek compensation from Boeing. It had grounded its 18 Boeing 737 Max 8 aircraft.
Boeing 737 Max: The FAA wanted a safe plane – but didn’t want to hurt America’s biggest exporter either
March 22, 2019
Susan Webb Yackee, Professor of Political Science, University of Wisconsin-Madison
Simon F. Haeder, Assistant Professor of Political Science, West Virginia University
Disclosure statement: Susan Webb Yackee has an Innovation in Regulatory Science Award from the Burroughs Wellcome Fund, and her research is also supported by the Russell Sage Foundation. Simon F. Haeder is a Fellow in the Interdisciplinary Research Leaders Program, a national leadership development program supported by the Robert Wood Johnson Foundation to equip teams of researchers and community partners in applying research to solve real community problems.
Partners: West Virginia University provides funding as a member of The Conversation US.
Recent incidents aside, air travel is incredibly safe these days.
Global airplane fatalities averaged 840 a year from 2010 to 2018, compared with almost 2,000 in the 1990s. In fact, this decade is on pace to see the fewest casualties since the dawn of jet travel in the 1930s.
Yet the March 10 crash of Ethiopian Airlines Flight 302 serves as a stark reminder that despite the significant safety gains in commercial aviation, accidents are still possible. And when they occur, the number of fatalities is often large.
What makes the most recent crash particularly concerning is that the airplane design may have played a significant contributing role. Perhaps even worse, there are early indications that regulators at the Federal Aviation Administration – the agency that oversees the development and certification of all U.S. airplanes – may have been more concerned about bringing the Boeing 737 Max to market than about consumer safety.
As a result, observers have accused the FAA of being too cozy with Boeing. And transportation officials in both the U.S. and Canada plan to review how the plane got certified to fly by the FAA.
As experts on the regulatory process, we see this as a tragic example of what happens when an agency must balance competing goals. The FAA was supposed to protect air travelers and regulate aircraft makers. At the same time, it doesn’t want to make it harder for companies like Boeing to make money in a very competitive global market.
And a heated rivalry is exactly where Boeing’s current troubles began.
Competing in a global market
The global market for jetliners has been dominated by two major competitors: Boeing and Airbus. Since the 1990s, they’ve been in a bruising battle over market share.
Competition has been particularly fierce in the narrow-body or single-aisle aircraft market. This segment historically has made up about two-thirds of deliveries for both Airbus and Boeing. It also holds significant growth potential in the future. Altogether, they have sold and delivered almost 20,000 aircraft from the A320 or 737 families since their respective launches in the 1970s and 1980s.
When one company gains even a slight edge by offering a more efficient product, the implications can be massive. This occurred with the highly successful launch of the Airbus 320neo in 2010. The cost savings from reduced fuel consumption proved so significant that even American Airlines, an exclusive Boeing customer at the time, ordered several hundred 320neos. Fuel is the second-highest expense for airlines after labor.
Boeing playing catch-up
Falling behind its rival, Boeing felt the need to update its 737 family. And it had to do it fast, particularly with regard to fuel efficiency.
So Boeing decided to alter the position of the plane’s engines. But doing so changed the plane’s aerodynamics in a way that could cause the plane’s nose to tip upward into a stall, which is what appears to have happened repeatedly before the recent crashes.
Boeing sought to solve this engineering problem using an automated correction system known as MCAS. A malfunction of this system may have contributed to the crashes of Ethiopian Airlines Flight 302 and Indonesian Lion Air Flight 610 in October – although investigations are ongoing.
Boeing has put out a statement saying that it working with investigators to determine the cause of the crash.
The FAA and the Boeing 737 Max 8
Even before these incidents, there were concerns that the FAA was delegating too much safety oversight to Boeing itself.
The FAA allowed Boeing to handle much of the safety certification process, and Congress supported doing so – though recent events may be prompting lawmakers to change their tune. Reports have suggested that Boeing even excluded FAA technical experts from some of those decisions.
In addition, recent analyses suggest that Boeing made several misjudgments when it designed MCAS and hasn’t been fully forthcoming with both the FAA and airlines about how it worked. The airline has also been accused of providing inadequate training for pilots.
‘Regulatory capture’ at the FAA?
This has led critics to argue that the FAA has gotten too close to the entity it was supposed to oversee.
This situation – when regulatory agencies created to protect the public interest become overly entangled with commercial and special interests – is known as “regulatory capture.” Many see this as corrosive for society. The 2010 Deep Water Horizon oil explosion, the largest marine spill in history, is considered an example of this.
Yet, capture is difficult to prove, especially in an era when businesses must work closely with government to ensure that agency officials have the best and latest technical information to develop and issue appropriate regulations.
During this process, public regulators are supposed to act in the “public interest.” However, the term is inherently vague and open to a multitude of competing interpretations. Unless it involves outright bribes or other corrupt activities, business influence on regulators fails to amount to criminal conduct.
To us, it seems that the FAA was simply caught in an impossible position between the competing goals of protecting consumers and protecting American business interests. In this case, the pendulum may have swung too far to the side of the latter.
Unquestionably, we want our airplanes to be safe. And, to be clear, we believe Boeing does as well. Yet we also want American companies to be successful, and regulations are inherently costly and time-consuming for businesses, many of which are competing with companies worldwide.
It is not surprising that Boeing was eager to move forward with the 737 Max as fast as possible. Nor is it surprising that the FAA and other regulatory bodies are hesitant to impose excessive burdens on American companies – particularly on one of the nation’s premier exporters.
And generally, business interests tend to be much more successful in obtaining their preferred regulatory outcomes than public interest groups. Our own recent work shows that the White House – regardless which party controls it – is more likely to interfere with regulations coming out of more liberal and arguably pro-regulatory agencies.
The pendulum keeps swinging
The existence of competing incentives confronting regulatory agencies is nothing new. Public agencies must serve a multitude of goals and objectives and somehow find an appropriate balance.
Yet, at times, the balancing act by public agencies may tilt too far in one direction. And unfortunately, when the imbalance occurs at agencies tasked with protecting public safety, the consequences can be exceedingly dire.
It seems likely that increased public scrutiny in the wake of the two crashes may force the FAA to take a more aggressive stance on the side of consumer safety in the future. Eventually, however, business interests are likely to begin pushing back, and once again the pendulum will swing the other way.
Navjot Gill, logged in via Google: That is an A330neo (widebody long-haul plane) not an A320neo (narrowbody, short-haul plane) in the picture. There are people out there knowledgeable about commercial who can fact check these things. It is astonishing how many times the media gets basic things incorrect about this industry. As the author of “The Killing Zone” Paul Craig mentioned, if the media gets basic information about aviation wrong, makes you wonder about the reporting on other industries one is not very knowledgeable about.
David Peetz, Professor of Employment Relations, Centre for Work, Organisation and Wellbeing, Griffith University, In reply to Navjot Gill: Navjot, The person who uploaded the picture was most likely unrelated to the authors of the story and working from stock images on file. So I don’t think it says anything bout the accuracy of the story itself.
Susan and Simon, it seems that issues of regulatory capture would be less salient here if safety certification were handled by an international body, rather than a series of national ones, as the national ones have an inherent conflict of interest (safety vs economic competitiveness). I can see problems with such an approach but in the end it may be the best resolution to a problem that affects people in many countries, not just the USA. Any thoughts?
EU fines Google $1.7 billion for abusing online ads market
By KELVIN CHAN and RAF CASERT
Wednesday, March 20
BRUSSELS (AP) — European Union regulators have fined Google 1.49 billion euros ($1.7 billion) for abusing its dominant role in online advertising, the third big antitrust penalty they’ve given the internet giant since 2017.
The latest punishment means the commission has now issued Google with almost $10 billion in fines from probes into various parts of the Silicon Valley tech company’s business.
In the latest ruling, Google and parent company Alphabet were found to have breached EU rules by imposing restrictive clauses in contracts with websites that used its AdSense advertising business. That prevented Google rivals from placing their ads on these sites, the EU’s competition commissioner, Margrethe Vestager, said Wednesday.
“Google abused its dominance to stop websites using brokers other than the AdSense platform,” Vestager told a news conference as she outlined the results of the long-running probe.
The AdSense For Search service — known simply as AdSense — lets Google act as a middleman between advertisers and website owners who want to make money by selling space for ads. AdSense allows web publishers such as newspapers and bloggers to place text ads on their websites, with the content of the ads based on results from search functions on their sites.
The commission said Google has 70 percent of the European market for “online search advertising intermediation.”
Microsoft filed a complaint with the EU in 2009 about Google’s service and the commission formally launched its probe in 2016, although it said at the time that Google had already made some changes to give customers more freedom to show competing ads.
Google “prevented its rivals from having a chance to innovate and to compete in the market on their merits,” Vestager said. “Advertisers and website owners, they had less choice and likely faced higher prices that would be passed on to consumers.”
Last year, Vestager hit the company with a record 4.34 billion euro ($5 billion at the time) fine following an investigation into its Android operating system. In 2017, she slapped Google with a 2.42 billion euro ($2.7 billion at the time) fine in a case involving its online shopping search results.
Google’s case highlights how the EU has led the way in promoting tougher regulation for the big tech companies . Besides cracking down on antitrust breaches by multinationals like Microsoft and Intel, the EU has enforced tougher data privacy rules that affect Facebook and other social media companies.
Google’s senior vice president of global affairs, Kent Walker, said the company agrees that “healthy, thriving markets are in everyone’s interest.”
“We’ve already made a wide range of changes to our products to address the commission’s concerns. Over the next few months, we’ll be making further updates to give more visibility to rivals in Europe,” Walker said in a statement.
Google, which is appealing both of the earlier cases, said ahead of Wednesday’s announcement that it has put in place remedies required by the commission. The company said in a blog post that it was making some tweaks to its shopping results. It will also start asking European users of new and existing Android phones if they want to use another search service or mobile browser.
Follow the AP’s coverage of technology at https://apnews.com/apf-technology and of social platforms at https://apnews.com/Socialplatforms
Opinion: Lawmakers Are Rolling Up Their Sleeves to Legislate Privacy, but Are They Getting It Right?
By Krisztina Pusok
Another week, another hearing discussing privacy legislation on Capitol Hill. This time, it was the Senate Judiciary Committee who gathered recently to discuss the European Union’s General Data Protection Regulation (GDPR), the California Consumer Privacy Act (CCPA) that will go into effect January 1, 2020, and other issues considering a federal privacy legislation.
It’s evident that the 116th Congress is doing something in moving the discussion on privacy forward. But in light of the several bills already proposed on both sides of the aisle, the question remains if the regulators will get it right this time.
Following major data scandals and breaches in the past year, lawmakers of both parties have shown that they are serious about taking up privacy legislation. A handful of senators — including Ron Wyden, D-Oregon, Brian Schatz, D-Hawaii, Marco Rubio, R-Florida, Amy Klobuchar, D-Minnesota, and John Kennedy, R-Louisiana — have all introduced bills in the past five months. All proposals represent their own model of privacy regulation, and while each of them takes a stand in fleshing out specific obligations and rights, only some of the provisions and ideas may end up in a final proposal.
So, the question is what issues and principles should we expect to factor in at the core of a comprehensive federal privacy regulatory model?
The issue of pre-emption, whether the federal government assumes authority over balkanized state policies, is the most contentious in the data privacy debate.
California has passed the CCPA, and other states are following suit. This, however, creates a privacy patchwork of state based “solutions,” which will likely create more problems than it solves. Inconsistent state privacy laws already impose excessive compliance burdens for content creators and small businesses, making it difficult for these companies to compete with internet giants. Small businesses and entrepreneurs are in need of clear and nationally uniform privacy guidelines to help them grow.
Currently, several of the legislative proposals could impede innovation and restrict choices for consumers. To ensure the continuation of United States’ success as a leader in technological innovation, it is the policymakers’ responsibility to make sure that strong privacy protections are not at odds and do not threaten innovation and research, and do not impose burdens on the small players. As such, a workable legislative framework should include clear provisions that promote education and innovation and do not punish small and medium companies at the benefit of the largest players, as the GDPR does.
Clear rules should empower entrepreneurs and businesses to design for privacy upfront, rather than having to wait for a data breach or another data misuse scandal to force the rollback of a product or service.
An additional key ingredient for getting the privacy legislation recipe right is reasonable data security and corporate responsibility. Data breaches are subjecting billions of consumers to the threat of identity theft and loss of privacy. Yet, despite major security advancements, there is no sign of slowing down the amount of data breaches and number of consumers affected every year.
A recent study published by the American Consumer Institute, titled “How Safe Are Popular Apps,” shows that many popular apps are not as secure as they should be, highlighting the need to continually improve the products and cybersecurity practices to protect customers from breaches.
Drafting comprehensive privacy legislation is a complex endeavor and these recommendations are by no means exhaustive and prescriptive, but they should serve as guideposts to steer legislators toward the right path. The stakes are too high to unintentionally lock ourselves in a context that would prevent us from innovating.
We have all of the right signals showing us that policymakers want to legislate, and this Congress has an opportunity for bipartisan agreement on protecting personal information privacy. Yet, time is probably a crucial aspect that will influence the content of a 100-plus-page legislation.
Congress has less than 10 months until CCPA and other state legislations kick in to figure out an optimal solution for protecting the online privacy of American consumers. The current patchwork of state privacy laws has not served Americans well, and it’s threatening to become more confusing and complex for businesses to thrive and consumers to enjoy the latest technology. It’s time for lawmakers to roll-up their sleeves and get this right. There is no more time to be lost.
ABOUT THE WRITER
Krisztina Pusok is the director of policy and research at the American Consumer Institute. She wrote this for InsideSources.com.