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Boeing Ethical Dilemma

Andrey, Wu

Columbia Southern University

MBA 6301 Business Ethics

Dr. Mark Balto

Feb 23, 2021

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Introduction

Originating in 1916, William E. Boeing and Conrad Westervelt founded an airline

company named B&W. In 1917, changed its name to the Boeing Aircraft Company. Initially,

Boeing focused mainly on the production of military aircraft for service with the US Navy.

Boeing Airplane began offering airmail services in the late 1920s, and in 1928, William Boeing

established Boeing Airplane & Transport Corporation, which included both production and

airline operations. Boeing is now the world's largest aerospace firm, producing commercial

jetliners, defense, space, and security technologies, as well as providing aftermarket support

(Boeing, 2022).

When Boeing was the icon of aircraft safety, individuals would say things like "If it's not

Boeing, I'm not going." However, following two tragic incidents involving the same new kind of

Boeing aircraft, the Boeing 737 MAX, everything has changed.

Boeing Dilemma

Crashes

On October 29, 2018, a Lion Air Boeing 737 MAX 8 plane with flight number 610

crashed 13 minutes after takeoff, killing all 189 people on board. The new maneuvering

characteristics augmentation system (MCAS) relied on a single angle of attack (AoA) sensor,

and when the sensor failed, MCAS incorrectly concluded that the plane was climbing too steeply,

engaged improperly, and forced the plane's nose down, causing it to crash into the sea at high

speed (Associated Press and Reuters, 2019). The Federal Aviation Administration (FAA) issued

an emergency airworthiness directive a week later, on November 7, 2018, informing all airlines

flying Boeing 737 MAX aircraft of updated operating procedures pertaining to malfunctioning

AoA sensors.

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On March 10, 2019, five months later, a Boeing 737 MAX 8 of Ethiopian Airlines, Flight

302, crashed six minutes after takeoff, killing all 157 people on board (Theguardian, 2019). The

MCAS system had erroneously activated once more, and despite the pilot's best attempts, the jet

crashed into the earth at 1100 km/h. Without having the opportunity to study the second disaster,

the FAA declared the Boeing 737 MAX 8 model to be safe to fly the next day. President Trump

and the media were assured by Boeing CEO Dennis Muilenburg that the model was safe. The

FAA openly acknowledged a resemblance between the two disasters the next day (March 13,

2019), and grounded all Boeing 737 MAX planes. By 18 March, 387 aircraft operated by 59

airlines were grounded (The Times Editorial Board, 2019).

In such tragedies, the regulatory body is frequently involved, either because to excessive

influence from the business they are intended to regulate (known as regulatory capture) or

political pressure to minimize economic consequences. In November 2018, the FAA was well

aware of the MCAS system's reliance on a single AoA sensor, and if it had taken that single point

of failure seriously at the time and grounded all 737 MAX planes, the 2019 Ethiopian Airlines

Flight 302 accidents may have been avoided, saving 157 lives. A recognized risk should not

require a second accident to be regarded seriously.

Ethical Issues

There have been serious breaches of business ethics in the Boeing case.

The Rright to Safety

Boeing did not protect the consumers from harmful products. Boeing feared it would

affect its stock price and profits if it concluded the crashes were caused by a design flaw in the

737 MAX 8. It tried to convince the FAA that the plane was safe to fly. serving passengers and

that was the cause of the 2nd crash with Ethiopian Airlines Flight 302 (Cassidy, 2020).

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The Right to Be Informed

Boeing has taken away the right to be provided with adequate information about

products. Boeing to inform the airlines about MCAS, it removed any references to MCAS from

the operations manual that 737 MAX pilots neglected on, and the FAA did not object to this lack

of transparency (Cassidy, 2020). This is also considered a violation of business ethics regarding

information disclosure.

The Right to Choose

In the case of Lion Air Flight 610, information about MCAS was not fully shared by

Boeing in the manual. As a result, the pilot also has no information to turn off MCAS or choose

whether to use MCAS to support flight or not. Boeing has slashed guidelines to avoid being

required by the FAA to retrain pilots for new planes, costing training costs and time to put the

plane into commercial use (Cassidy, 2020).

The right to Be Heard

A few weeks after the first Lion Air crash and a few months before the second Ethiopian

Airlines crash, in November 2018, American Airlines' pilot's union made several suggestions to

Boeing to fix the 737 MAX's systems (Devine et al., 2019). However, these suggestions on how

to improve the safety of MCAS were ignored by Boeing. Boeing ignored the comments of pilots,

who directly use its aircraft, and Boeing ignored the right of customers to be heard.

Deception and Manipulation

To hide information about the faulty design of the 737 MAX 8, Boeing blamed the pilots

of Lion Air Flight 610 for not taking the correct steps that led to the crash. However, studies

from the second Ethiopian Airlines accident showed that the pilots of the flight performed all the

instructions to turn off the MCAS, but the plane still crashed to the ground (Devine et al., 2019).

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Boeing shows that they have deceived both the US and the world when CEO Dennis Muilenburg

always assures President Trump, FAA, and the public that the Boeing 737 MAX model is

absolutely safe.

Flight Safety Standards

Each country has a different aviation safety standard, which is issued and adopted by the

aviation regulator. Just as the US is managed by the FAA, Vietnam is managed by the Civil

Aviation Authority of Vietnam (CAAV). However, all countries have one thing in common about

aviation products that must always ensure the highest standards of aviation safety. In fact, the

planes are mainly produced in developed countries such as the US or the European Union.

Therefore, aviation safety standards are mainly based on the standards of these countries. An

airline like Boeing must meet the FAA's aviation safety standards to be able to be used within the

United States, from which it can be purchased and commercialized by other countries.

How Boeing Responded to The Criris

Boeing deliberately concealed information about the design error of the Boeing 737

MAX aircraft, irresponsibly to the community when not properly assessing the seriousness of the

design error. Add to that the manipulation of the media by blaming pilots for the Lion Air Flight

610 crash. These were all responsible for the second crash with Ethiopian Airlines that killed 157

lives.

After finishing the investigation into the cause of Lion Air Flight 610 crashing off the

coast of Indonesia's Java Sea, Boeing still did not give any reason related to the mistakes in the

design of the 737 Max. Although in Indonesian authorities' 320-page final report on the accident,

released Friday faults Boeing for developing a powerful flight-control system called MCAS that

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relies on a single problematic sensor, and for failing to adequately inform pilots and regulators

how it works (MacMillan, 2019).

Boeing claimed it had adjusted the 737 Max to "avoid the flight control circumstances

that happened in this disaster from ever happening again," including activating MCAS only

when two different sensors concur the jet has stalled. "To guarantee that every pilot has all of the

information they need to fly the 737 MAX safely," the airline said it is upgrading crew manuals

and pilot training. However, Boeing's modifications do not make the 737 MAX aircraft any safer

(MacMillan, 2019).

Despite the fact that Boeing eventually created a $50 million fund to compensate the 346

victims' relatives and accepted the grounding of the entire 737 MAX fleet (Shepardson, 2019).

The loss of life, however, had a significant impact on Boeing's sense of duty and business ethics.

Leadership Influences Marketing

Boeing is concentrating on providing cost savings with the 737 MAX, highlighting that

the new aircraft is more fuel-efficient and that pilots do not need to be retrained to operate this

aircraft. These advertising campaigns have persuaded airlines to invest in Boeing's new aircraft

since it allows them to swiftly put it into commercial service while providing significant cost

savings. However, because to negative media coverage of the product and to avoid the FAA

imposing mandatory retraining requirements, Boeing omitted an introduction to MCAS from the

handbook as well as material supplied to pilots regarding the new system on the 737 MAX

(Cassidy, 2020).

Conclusion

Through the Boeing ethical dilemma, it can be seen that Boeing has made too many

mistakes in implementing business ethics towards customers. The mistakes have been

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exacerbated by Boeing's failure to act following business ethics since the first crash. To bid for

the cost savings and attract customers to buy 737 MAX products, Boeing had to fund $50 million

to compensate the families of the 346 victims and ground the 737 MAX fleet and has caused

Boeing over $18 billion in losses (Gelles, 2020). However, what Boeing lost the most was

customer trust, which it had to build for many years to gain.

Through the event of Boeing's ethical dilemma, businesses need to see the importance of

building a corporate culture around the core value of business ethics. All business enterprises are

for-profit, but if business enterprises do not have ethics, they will not develop sustainably.

Building business ethics needs to start with each individual in the team and department, it is

necessary to build a culture and framework to ensure that everyone can contribute to building a

perfect product based on the real value and safety to the customer.

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References

Boatright, J. R., and Smith, J. D. (2017). Revel for ethics and the conduct of business (8th ed.).

Pearson.

Boeing (2022). Boeing company introduction. https://www.boeing.com/company/general-info/

Cassidy, J. (2020). How Boeing and the F.A.A. created the 737 MAX catastrophe. The New

Yorker. https://www.newyorker.com/news/our-columnists/how-boeing-and-the-faa-

created-the-737-max-catastrophe

Devine, C., Cooper, A., Griffin, D. (2019). Pilots union to Boeing: 'Inexcusable' to blame pilots

for 737 Max crashes. CNN. https://edition.cnn.com/2019/05/23/business/american-

airlines-boeing-pilots-union/index.html

Gelles, D. (2020). Boeing expects 737 Max costs will surpass $18 billion. The New York Times.

https://www.nytimes.com/2020/01/29/business/boeing-737-max-costs.html

The Times Editorial Board (2019). Why was the FAA so late to deplane from Boeing’s 737 Max?

Los Angeles Times. https://www.latimes.com/opinion/editorials/la-ed-trump-faa-737-max-

grounded-20190314-story.html

MacMillan, D. (2019). ‘Our daughter died in vain’: What Boeing learns from plane crashes. The

Washington Post. https://www.washingtonpost.com/business/2019/10/28/our-daughter-

died-vain-what-boeing-learns-plane-crashes/

Associated Press and Reuters (2019). Indonesia report finds fatal Lion Air jet crash due to

Boeing, pilots, maintenance. NBC News.

https://www.nbcnews.com/news/world/indonesia-report-finds-fatal-lion-air-jet-crash-due-

boeing-n1071796

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Shepardson, D. (2019). Boeing to make $50 Million in payments to 737 MAX crash victims’

families. https://www.reuters.com/article/us-ethiopia-airplane-boeing-idUSKCN1UC1O0

Theguardian (2019). Ethiopian flight 302: second new Boeing 737 to crash in four months.

Theguardian. https://www.theguardian.com/world/2019/mar/10/ethiopian-flight-302-

second-new-boeing-737-max-8-to-crash-in-four-months.

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