Is the EU now the world’s most important airplane regulator?

In early March, Boeing had reason to feel pleased with itself. Its flagship airplane, the 747, had just celebrated its 50th birthday. A humbled Airbus announced it was shelving its rival A380. And its new long-haul 777X jetliner was due to be unveiled at its factory outside Seattle.

However, events turned March into one of the worse ever months for Boeing after one of its new 737 Max aircraft crashed. It came just a few months after another 737 Max accident. The two events killed a total of 346 people. Two days later, regulators around the world grounded the plane.

There are many lessons to be learnt from this, even if the exact reasons for the two crashes are as yet unknown. One of them is about airline regulation, and who leads the way in a global environment where there is no recognised international standard. The 737 Max tragedies could mean the European Union Aviation Safety Agency (EASA) is now the lead regulator.

In this case, the sequence of events is revealing. The Lion Air crash off Indonesia in October was initially seen as an exemption, but after the Ethiopian Airlines accident on March 10, regulators noted strange similarities between the two incidents. The Federal Aviation Administration (FAA), the US agency, initially held out, but then followed suit on March 13. The next day, Boeing itself grounded its entire global fleet of 737 Max aircraft.

Why was the FAA the last major regulator to act? The accidents raise difficult questions about the FAA, long considered the global lead in setting aviation standards.

Declining oversight

In this case, early indications show the 737 Max was certified in March 2017 without the usual, rigorous tests. The aircraft carries a new system, known as the Manoeuvre Characteristics Augmentation System (MCAS) to detect whether a plane is in a stall and automatically pushes the aircraft’s nose down. But pilots switching from previous models of the 737 to the 737 Max only needed a 56-minute iPad training session. The FAA did not demand any extra training for the certification.

Even after other world agencies grounded the plane, acting FAA Administrator Daniel Elwell said its review shows “no systemic performance issues and provides no basis to order grounding the aircraft.” Critics say it is getting too cosy with Boeing. But the problem may have been the FAA’s declining oversight as it sought to deregulate the sector.

Set up in the 1950s, the FAA has been the industry’s gold standard. Other regulators around the world followed its lead. But with this incident, it was isolated: other authorities seem to have lost trust in it. It had to follow regulators like the EASA, which was only created in 2002.

The de facto world competition regulator

If the FAA is no longer today’s aviation security beacon, then who is? The EASA is clearly a global player now. EASA Executive Director Patrick Ky explained to the European Parliament’s Transport Committee after the crash how it would look at Boeing’s upcoming software updates “very deeply, very closely”.

If EASA does step up, it would reflect the EU’s increasing role in global regulation: the European Commission is now the de facto world competition regulator, recently ruling on issues that the US authorities have ignored like Apple’s taxes and Google’s market dominance.

The EASA may have to do so alongside the first country to ground the Max 8, China, which is set to become the world’s biggest air travel market by the middle of the next decade.