Podcast 068 Transcribed: Mulling MAX re-entry as Dickson leads FAA

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Musical Intro.

Mary Kirby: Welcome to the #PaxEx podcast, available on Apple and Google Podcasts. This is episode 68 of the show, where we talk about how the airline passenger experience is evolving in a mobile, social, vocal world. I’m Mary Kirby and I’m joined by my cohost, Max Flight. Max, how are you doing?

Max Flight: I’m doing very well, Mary. I’m getting excited about my next aviation adventure up to the New York Air Show, coming up August 24th, and 25th. The Red Arrows are coming across the pond, which I’ve never seen them perform before. That’ll be good. But also the F-35 demo team is scheduled to be there, so I’m really looking forward to that. Anything big and fast and loud with Pratt & Whitney engines, I’m excited.

Kirby: Yeah. That’s right up your alley, Max. That sounds spectacular. I’m looking forward to getting back on the road myself here at the beginning of September for the big APEX EXPO in Los Angeles, which we’ll talk about a little bit later, but yeah, it’s good to be chatting with you again.

Flight: Great. Well, let’s take a look at some of the PaxEx news stories that are making headlines. The US Federal Aviation Administration has a new administrator. On August 12th, Stephen Dickson was sworn in by US Transportation Secretary Elaine Chao. Dickson is a long-time industry veteran with nearly 40 years of experience. He recently retired from services [as] Senior Vice President of Flight Operations for Delta Air Lines. There he was responsible for the safety and operational performance of Delta’s global flight operations, as well as pilot training, crew resources, crew scheduling, and regulatory compliance. Now, notably, he also flew in line operations as an Airbus A320 captain. Previously, he flew on the Boeing 727, the 737, the 757, and the 767 during his career. He’s also a former United States Air Force Officer, having flown the F-15 fighter.

Flight: Well, after the swearing in ceremony, Dickson commented on the Boeing 737 MAX’s return to service. He said, quote, “I want to again be clear and absolutely committed that the FAA is a safety-driven organization, and safety is my highest priority. This plane will not fly commercial service again until I’m completely assured that it is safe to do so.” Well, Dickson becomes the 18th administrator of the FAA. It’s a big job, as we all know. Over a $16 billion budget, over 47,000 employees. And of course he’s replacing acting administrator Dan Elwell, and Elwell is going to serve as FAA deputy administrator, which I think is smart, Mary. That kind of helps the transition, I think.

Kirby: Oh, absolutely, and he’s also been actually rather on the ball. I don’t know if you’ve found that during the various hearings, Max. Elwell has … He seems like a very kind of a logical individual.

Flight: Yes.

Kirby: Very kind of calm and logical, and so, yeah, I think keeping him on board here makes a ton of sense but you know, Dickson’s resume is really remarkable, isn’t it?

Flight: Oh, it is. It absolutely is. I mean, certainly he knows commercial aviation, he knows military aviation. I don’t know about his general aviation experience or background, but the FAA is, well, you could say maybe they’re in a crisis right now, or at least the certification process is. Boeing is certainly in crisis right now, and that puts the FAA in a critical period. Boeing, the FAA, and the whole country, the United States, the flying public, all of us need to get the 737 MAX issues resolved, and I think that’s probably his number one priority right now.

Kirby: Oh, absolutely. You know, and I have to say the notion that the head of the FAA has flown the 737 before is at least somewhat confidence-inducing, given the MAX grounding, appreciating of course that the MAX has material differences to legacy 737s. And I bet I’m not alone in wanting to see Dickson test the MAX software fixes in a simulator at minimum, but perhaps in real life too.

Kirby: And kind of drawing on the idea you proposed a few episodes ago, in the context that airline pilots would play an important role in assuring the traveling public of the MAX’s safety, perhaps such tests with Dickson in a real or simulated cockpit could be disseminated to the public. You know, I think it’s interesting that President Trump announced that Dickson was his pick late last year, and that was months before the March crash of Ethiopian Airlines flight 302, so Dickson’s 737 experience might not have been a material factor in his appointment, but it’s certainly kind of convenient now, I think, in some ways.

Flight: Yes.

Kirby: But we’d also be remiss if we didn’t, on the other hand, mention that there are reports also … there’s been some controversy, let’s say, around the Dickson appointment, where long-time 777 pilot Karlene Petitt was grounded after she relayed safety concerns to Delta management, allegedly. This is all part of a lawsuit right now. And it was understood that Dickson had ratified the decision to have her psych evaluated and there’s been a number of reports out there. Max. The Politico report is a big one, but others have weighed in as well, including aviation journalist Christine Negroni, who wrote a recent post for her Flying Lessons website and she said in reference to the the Dickson appointment quote, “What kind of advocate for the flying public will Dickson be if in his job with Delta he seemed more inclined to target the messenger then investigate the message,” end quote. So she didn’t mince any words there. And of course when members of the Senate Commerce, Science and Transportation Committee learned of Dickson’s involvement in this – what’s being described as a whistleblower case while at Delta – they slowed down the process of voting him in, but in the end a 52-40 vote broke along party lines.

Kirby: So I’m certainly hopeful that Dickson fosters the safety culture as he described in his remarks after being sworn in, Max. I certainly hope that that is the case. He is, of course, again not without some controversy as mentioned and as you say, one of his many tasks now will be to ensure that his agency is 100% confident that the MAX is airworthy before it returns to service, which is now looking like it might not happen until the end of the year and potentially even longer. Given what you’ve read, Max, do you feel like Dickson is the right man for the job right now?

Flight: He is on paper, certainly, and these other issues are kind of problematic for me. Caused me to question a little bit the commitment to safety, but on paper with his background and the planes he’s flown and the positions he’s held in the past would seem to indicate that he would be a really great candidate for this FAA position as administrator and someone who can hopefully navigate through all of the complexities of getting the 737 MAX back up in the air. But we do see problems coming up. Any system as complicated as an aircraft these days, when you start to look into it, you’re always going to find things that aren’t 100% perfect. Does that mean that they’re unsafe? No, not necessarily, but once you open up the box and look inside, you find things, and we’ve seen how they’ve found things. There’s this one issue with the simulations that were conducted and they uncovered a circumstance under which the [MAX] plane would have a nose town attitude. Same as what we talk about with the MCAS but not related to the MCAS apparently. And the FAA was concerned that in the simulators, the pilots either couldn’t respond to this kind of unusual condition quickly enough or they just couldn’t. And so, now Boeing is looking at utilizing the second flight control computer. The 737 has two computers, two flight control computers. And, I didn’t realize this, but they’ll use just one computer on a flight and then on the next flight they switch and use the other computer. Reportedly, Boeing was able to demonstrate to the FAA previously as part of the certification process, that that computer is reliable enough so that only one was needed. Well, now they’re looking at changing that and instead operating both computers on every flight so that they can be crosschecked against one another to see if there are … this condition arises that causes this nose down pitch, so I mean that’s …

Kirby: That seems like a big deal.

Flight: It does seem like a big deal.

Kirby: The Seattle Times is calling it ‘a fundamental software design change’ and it looks like Satcom Guru Peter Lemme has weighed in as he has throughout all of these months with respect to the grounding. He’s weighed in on this latest Seattle Times report dated August 1, but this is something rather significant and material. And I guess with all of these regular reports now, including as you say, these reports that originally broke in June and the latest reports that this is a fundamental software design change being executed at Boeing, the public now is more aware of the MAX, not less aware.

Flight: Boy, are they ever.

Kirby: You know, and we’re seeing many people, including now people in industry vowing to either not fly the MAX or to wait until it’s in revenue service for some time without incident before doing so.

Kirby: And that’s also something that I’ve noticed shift a little bit where in the initial weeks, even after the worldwide grounding, there were some, including some rather prominent aviation geeks, but there were some prominent individuals in industry that were still giving a certain amount of benefit of the doubt to Boeing. Whereas, we’re seeing just a little bit more caution with words now. And of course, we’re seeing on social media, we continue to see travelers that are just outright afraid, which takes us back again to how do you instill confidence in the traveling public after this aircraft has been grounded for so long?

Kirby: It’s kind of painful to think that, okay, this grounding could … it could go on till the end of the year, but it might even go into next year. I mean there’s talk now, including some of the suppliers on their recent earnings calls are talking about it’s a possibility that this could bleed into 2020 and what does that mean? What does it mean for travelers that have heard nothing but negative reports about the Boeing 737 MAX then for say a year, and then what does it mean for all of the airlines and suppliers that are attached to this aircraft is kind of staggering to think about.

Flight: It is, and we’re seeing more and more airlines and PaxEx stakeholders sharing a little bit of color around the negative impact to their businesses on this protracted MAX grounding. One thing you see from the carriers is that capacity is tight right now, especially for those who are dependent on the MAX and this is causing some difficulties. We’re seeing routes canceled and a lot of fallout from this. Mary, how do you think the airlines as well as the suppliers have been affected?

Kirby: Yeah, I mean the reports are kind of pouring in now on a near daily basis of the impact on airlines and of course ergo their operations of the grounding. Norwegian for instance, says it will end flights between North America and Ireland on I think it’s September 15. Now here’s the statement that they issued quote, “Since March, we have tirelessly sought to minimize the impact on our customers by wet-leasing replacement aircraft to operate services between Ireland and North America. However, as the return to service date for the 737 MAX remains uncertain, this solution is unsustainable.”.

Kirby: Now to be fair, Norwegian has had a number of financial difficulties even without the MAX involved, but this is really compounding things rather desperately for them. But others are saying similar things, whether it is about the fallout to their finances or even just their operations. So you have Canadian ultra low-cost carrier Swoop, which blamed some of its July disruptions on the MAX. Now, this is an airline that doesn’t even operate the MAX, but it said effectively that tight capacity in the market is preventing it from chartering other aircraft and indeed tight capacity appears to be a very real problem with reports that even older jets are now in hot demand. Then over at Airbus of course, meanwhile, they’ve got a huge backlog for A320neos, so it’s not as simple for an operator as saying, “Okay, now I’m going to go buy Airbus,” and so yeah, it’s been just staggering the number of reports of the fallout.

Kirby: Now even passenger experience stakeholders are weighing in and like I said, I covered the earnings calls for a number of these stakeholders recently for inflight connectivity providers, Gogo, Global Eagle and Viasat as well as in-seat power leader and IFEC provider Astronics, and all of them are exposed to the MAX and they’re all putting figures around that exposure and warning that of course, things could get worse if this drags on. But one thing that I found that was interesting was that both Gogo and Astronics during their calls highlighted the fact that because of tight capacity in the market, airlines are reluctant to take aircraft out of service to retrofit their aircraft and modernize their aircraft, whether that is with inflight entertainment and connectivity, seats, bins, you name it. They don’t want to take aircraft out. And the knock-on effect is that the grounding of the MAX is affecting aircraft retrofits on other aircraft types, which has then that knock-on effect for suppliers because they have a schedule that they’re looking at, a forecast for example, that they’re looking at of retrofits. And those forecasts are now being greatly impacted because airlines are hanging onto their planes and they don’t want to take them out as service, which is just, it’s like this domino effect that’s just unreal, you know?

Flight: That’s right, and it just keeps expanding farther and farther into the supply chain as well. I see that GE, the CFO Jamie Miller talked about the effect on cash flow because of the grounding and of course, GE Aviation in their partnership, CFMI supplies the engines for the 737s and Jamie Miller says the negative cash flow impact is around $400 million a quarter. Now that’s a cash flow impact. So presumably, when the volume returns, the production volume returns from the 42 a month that they’re currently operating at that Boeing is….presumably, they’ll get caught up and their cash flow will get caught up, but right now they’re eating a $400 million a quarter issue with cash flow. But we also talk about the possible impact on the NMA or the so-called 797. Certainly that’s been delayed. We see more and more voices talking about maybe that’s going to lead to a cancellation. I know Richard Aboulafia is not very confident that we’re going to to see an NMA and I think his latest or the most recent prediction I’ve seen from him is it’s less than 50% that Boeing will go ahead with that.

Kirby: Oh boy. Yeah, and you know, okay, I’m going to say it selfishly from a passenger experience standpoint, and I’m not alone in this either, some of us have been hoping with this NMA that Boeing would kind of put a fresh emphasis, shall we say, on the passenger experience and give serious thought to the cross section and potentially wider seats than what we see on the 737. Of course, one of the great negatives around the 737 outside of the MAX grounding is that the seats are only 17 inches wide, which we talk a lot about. And Airbus has an advantage with 18-inch-wide seat on the a A320 and so some of us in PaxEx land, Max, have been kind of hoping that all right, with this new design aircraft that Boeing will push forward and really hit it out of the park from a PaxEx standpoint.

Kirby: Now maybe it’s wishful thinking, maybe it is, but I do think that given what we’ve talked about so often that humans are, we’re just … we’re getting larger. The aircraft that is designed 50 years ago might not suit the needs of the modern traveler. And there’s an opportunity for Boeing to to change its thinking on this front going forward if it indeed moves ahead with NMA, which now appears uncertain. One of the aspects of the MAX grounding that I haven’t seen discussed is the impact on our environment of the grounding. So of course, the MAX was billed as being significantly more fuel efficient than its predecessor. That’s part of the reason why it’s got those giant engines on it, as much as 14% more efficient and of course, that means it’s got much better green credentials. With this grounding and of course, with airlines using older jets to fill capacity needs, the situation is not good for the environment. Yeah, so we know that travelers are paying close attention to the environment with the Flight Shame movement in Europe gaining steam. And of course, this is where climate-conscious travelers are vowing not to fly. So there is an environmental aspect and impact from the grounding in the context of the climate crisis that I think is rather important to consider. And also, when you think about the climate crisis and you think about how it’s affecting our world, Max, I don’t know, it’s a subject that I think needs to be looked at a little bit more.

Flight: It would be interesting to see someone make a calculation of how many tons of carbon monoxide are going into the atmosphere because of the fact that we’re flying more inefficient aircraft right now and not the 737 MAX. It probably is a significant number.

Kirby: Yeah. Yeah, alas.

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Flight: All right, well a big event coming up. Let’s switch gears here a little bit, Mary. The big APEX EXPO is scheduled to take place September 9th through 12th 2019 in Los Angeles. Mary, this is always a big show for Runway Girl Network. I’m sure you’re going to attend as well as some other familiar faces, but it’s also big for Runway Girl Network readers as well. What are you most looking forward to in LA?

Kirby: Well, I have to say the APEX EXPO is one of the two major PaxEx exhibitions on our calendar each year, Max. The other being the big Aircraft Interiors Expo in Hamburg. And this year’s event will see the APEX exhibition co-located with the Aircraft Interiors Expo’s America’s conference, which is a decidedly smaller footprint than what we see in Hamburg, but they’re going to be co-located with APEX as well as the IFSA exhibition, which is the International Flight Services Association and they serve the needs of the inflight food and catering community. But really, the heart of this exhibition is the inflight entertainment and connectivity community where APEX, formerly known as the WAEA, really got started in IFEC and content. And that includes … that means that we’re going to see tons of stakeholders in the IFEC space at this event. Now, one key trend that we’re seeing is that IFEC suppliers are moving away from a hardware focused message.

Kirby: So a little bit of background. When I started covering this industry now over 20 years ago, it was all about the boxes and the screens and the hardware. And we still see a bit of that where we’ll see aircraft antenna reveals sometimes at these exhibitions. They’ve become a bit common, and that’s of course hardware. But now it’s really all about the software and how the software can be used to personalize the experience for travelers. So it’s been really interesting to see the shift in messaging away from boxes to software. And I have to say that means also, that I need to reprogram my brain a little bit, Max, because I’m used to covering hardware so I’m hoping actually that the APEX EXPO is also also going to be educational for me as well. And I’m sure it will be because this will be a lot of the messaging.

Kirby: We got a hint of it actually at the Aircraft Interiors Expo in Hamburg when Panasonic Avionics unveiled its new Arc software, which is kind of a moving map, but so much more. The stated design objectives for this Arc software are storytelling, air-to-ground retailing and cross-platform personalization. And it’s also going to be using connectivity to support that retail element, so this true kind of moving map on steroids that we’ve talked about in the past that it seems to be coming to fruition. So I think we can see a lot of similar messaging around the software front and personalization at this forthcoming EXPO in Los Angeles. And I guess it speaks volumes about where we’re kind of at in society right now. Of course, as we’ve discussed before, in tandem with this, inflight advertising is about to be personalized. And so I expect to receive an update on what’s going on at the show because a number of stakeholders, including Global Eagle, are keen to get this right so that airlines can monetize their entertainment offerings whilst also providing engaging advertising to passengers, that’s not going to be deeply intrusive. Something a little bit more along the lines of what they’re used to experiencing kind of on the ground. But you know what I’m really excited about, Max? I mean, I love all the IFEC and interiors stuff, but at the APEX EXPO during the day-long conference before the actual exhibition opens its doors, they’ve got just an incredible lineup. CEO after CEO is scheduled to speak. It’s kind of amazing, and during their lunch they’re going to have a Women Leaders in Aviation Networking luncheon sponsored by Viasat and the lineup of women that are scheduled to attend is just absolutely remarkable.

Kirby: It’s going to be moderated by ViaSat’s senior vice president and chief financial officer, who is a woman. Her name is Shawn Duffy. And they’re going to feature American Airlines VP of global marketing Janelle Anderson, Atlantic Airways CEO Jóhanna á Bergi. Now, I believe I have butchered her name there, but we’ll include a link to the show. Etihad Airways vice president guest services and delivery Linda Celestino. JetBlue Airways senior vice president of talent and learning Rachel McCarthy. LATAM Brasil CEO emeritus, Claudia Sender. Oman Air SVP guests experience and branding Xia Cai. Qantas loyalty CMO Jo Boundy, and United executive vice president technology and chief digital officer, Linda Jojo. That is quite a lineup.

Flight: It is. When I looked at the schedule, I was just amazed and I noticed the same thing that not only were there many, many airline CEOs in the first day of the schedule, but the diversity of the speakers across all the sessions was, I mean there’s still room for improvement, but it really surprised me how diverse the group was. Of course, there’s always some awards at this event. The APEX Passenger Choice Awards are one of my favorites, but there’s lots of other awards as well.

Kirby: There are, yeah. It’s a special time, and I have to say hats off to the CEO of APEX and of IFSA. He’s CEO of both. His name is Joe Leader. I don’t know if you’ve ever met him, Max, but you may see him on Twitter. He’s always flying around the world meeting with these various airlines and he’s clearly done a bang-up job here on the schedule for this conference, and as you say, in improving diversity. It’s super exciting to see this kind of focus and to see so many senior women participate. Yeah, I’m thrilled. It’s going to be great and like I said, we’ll include a link to the schedule on the site for those who might consider joining in Los Angeles.

Flight: I have to attend next year. I have to. We don’t know where it’s going to be yet, do we?

Kirby: Yes, yes. I believe it’s San Diego next year. I believe, so can we convince you to fly over to the West Coast then, Max?

Flight: I think so.

Kirby: Very good. Very good. Well, unfortunately we’re rapidly coming to a close. I want to thank our listeners and remember, you can find us online at runwaygirlnetwork.com and on Apple and Google podcasts. Be sure to follow all the Runway Girl Network activity on Twitter at @RunwayGirl and remember to use the #PaxEx hashtag when tweeting about the passenger experience. Join in the conversation. We would love to have you in.

Flight: Please be sure to join us again next time as we talk about the passenger experience on the #PaxEx podcast.

Kirby: Take care everyone.

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