China Sends Skywritten Message by Grounding 737s

Investigators have only just begun sifting through the wreckage of Ethiopian Airlines Flight 302. And yet, less than 24 hours after last weekend’s crash southeast of Addis Ababa, China’s civil aviation authority made a dramatic declaration: All Chinese airlines would ground the type of plane involved in the accident—a Boeing 737 Max 8, the Chicago-based manufacturer’s best-selling model with a list price of $120 million.

China’s boldness signals a new level of confidence in its institutional authority within the world of commercial aviation. But it speaks to something else, too: the country’s ambition to own the skies. The market for large commercial planes is currently controlled by just two firms, Boeing in the United States and Airbus in Europe. China hopes to be home to the third.

China’s reason for grounding the planes seemed rational enough—this was the second 737 Max 8 to go down in five months. But China’s rapid decision appeared to set off a chain reaction, as other countries and airlines quickly followed its lead. First, Indonesia grounded all of its Max planes. Soon, several airlines followed: Ethiopian Airlines, Cayman Airways, South Africa’s Comair, Brazil’s GOL, MIAT Mongolian, Royal Air Maroc, and Aeroméxico. Shortly thereafter, the governments of Singapore and Australia grounded all of the Max fleets in their countries, too.

Then, on Tuesday, India and the European Union both grounded all of their 737 Max aircraft, leaving not a single airline outside of North America flying Max 8s. “It is the USA and Canada versus the world at this point,” one observer noted on Twitter as Boeings started to jam tarmacs globally. The next day, Canada followed the rest of the world, leaving the United States as the lone hold-out for several hours – until President Donald Trump issued an emergency order grounding the plane.

The astonishingly fast international reaction left the United States stumbling to defend an eventually untenable position —and China looking like a responsible, safety-conscious guardian of the skies.

Early in the scrum, aviation industry expert Jason Rabinowitz said that, to his knowledge, the decision of multiple airlines to ground a specific aircraft without an airworthiness directive felt unprecedented. Another industry observer called it “a punch in the nose” for Boeing—a tough assessment to argue with, from both a financial and public relations standpoint. The day after the crash, Boeing’s stock briefly plummeted by 13.5 percent, the most it had fallen since the day markets opened following the 9/11 attacks.

China played a pivotal role in instituting the shutdown. Not long ago, it would have been unthinkable for the Civil Aviation Administration of China (CAAC) to jump ahead of America’s Federal Aviation Administration (FAA) in flagging a global safety concern, particularly one that started with planes made in the United States. If anything, the CAAC typically looked to the FAA for guidance. This time, however, CAAC officials essentially scolded the FAA for imperiling passengers around the world.

“They have had difficulty making a decision, so we took the lead,” the CAAC’s deputy director told reporters in Beijing when asked about the FAA’s oversight of the 737 Max 8.

Establishing the CAAC as a setter of international standards could give China a leg up in its pursuit of the commercial airline market, which began in earnest in 2008 when it launched the C919 program. China’s C919 aircraft closely resembles Boeing’s 737 Max 8—a line that has been, until this setback, a huge success thanks to a combination of performance, range, and fuel efficiency.

Any highly visible stumble by Boeing or Airbus works to China’s advantage—particularly in the realm of safety, given China’s reputational challenges in that area. By the same token, the United States risked eroding its own reputation for safety amid news that the chief of Boeing had personally lobbied President Donald Trump to keep its planes in the air.

China hopes that its C919, which made its first flight in 2017, will someday rival the 737 Max in sales. But the headwinds it faces are daunting. For one thing, the C919 is a very heavy plane, which means it burns enough fuel to make it a nonstarter in the eyes of most overhead-conscious airlines. It would also be going up against two industry behemoths that have spent decades shoring up the supply chains, customer relationships, and massive fulfillment volumes that make selling airplanes easier.

But the Chinese aviation industry, generously subsidized by the government, can afford to play the long game. (For the record, Boeing and Airbus get subsidies, too.) Generous government subsidies allow the Commercial Aircraft Corporation of China, known as Comac, to price its planes cheaper than Boeing or Airbus. And the Chinese Communist Party has been lavishing its commercial aviation sector with ample resources and special perks as one of the 10 focus industries of the “Made in China 2025” initiative.

To be sure, the concerns about the safety of Boeing’s 737 Max 8 are real. Shortly after the crash, the FAA’s former chief of staff recommended that every single one of them be grounded. Still, it is exceedingly rare for civil aviation authorities to ground an entire model of aircraft so quickly after a crash. Had China not taken the first step, the skies might still be filled with Boeing Max 8s at this very moment, particularly given that the FAA continues to vouch for their safety.

Another subplot running beneath this drama is the trade war between Beijing and Washington. Over the next 20 years, 75 percent of all single-aisle airplanes sold worldwide will be bought by China. This gives any official directive from the Chinese government that impacts the U.S. economy (or vice versa) the whiff of economic stratagem. This whiff was strong enough that the vice chief of the CAAC felt compelled to publicly dispel rumors that China’s 737 groundings had anything to do with the ongoing trade dispute.

China has no illusions about its ability to challenge Boeing in the near term, or to rival the FAA as an arbiter of international aviation safety. But 10, 20 years from now, if Chinese-built jets are alighting on runways at Paris Charles de Gaulle and JFK, this moment may look prescient. For now, because of a series of groundings that began with an order issued from Beijing, approximately 350 American-made 737s are sitting at airports around the world, forbidden to fly despite the U.S. government’s repeated assurances that they’re perfectly safe.