On January 7 a JAL 787 caught fire after it had landed a Boston’s Logan Airport. About a week later pilots of an ANA 787 which was being flown over Japan received a warning alarm from the battery compartment. The pilots were forced to immediately land the airplane. As a result of these two incidents the NTSB grounded the entire fleet of 787s. An investigation immediately began to discover the problems with the batteries. Federal officials correctly characterized the problem as a serious concern. At a press conference to inform the public of the action that was being taken, Deborah Hensman, NTSB Chairwoman, stated that her agency’s investigation was still in its early stages. Preliminary investigations indicated that there appeared to be a problem with the batteries or the battery compartment. She cautioned that it was still not clear if the short-circuiting caused the January 7 runaway fire or the other way around. Aviation experts agree that had batteries caught fire during flight the incident could have resulted in a disaster. Firefighters needed more than an hour to control and put the fire out. Aviation officials believe that two serious incidents on two different 787s within a two week period was two too many. I agree with the decision to ground the entire fleet of Dreamliners.

By the end of February Boeing executives were handing out press releases announcing that it had found a permanent fix to the problem with the batteries. There had been industry talk that engineers were close to a solution. The company’s commercial airplane chief, Raymond Conner, appeared before the press to discuss the fix. He claimed that the company would place three layers of protection around and between the batteries. This would eliminate the cause of the fires and prevent the spread of any future fire. NTSB investigators, aviation experts and engineers familiar with lithium batteries received this news with skepticism. At no time did Mr. Conner say that the company had discovered the cause of the fires. Consequently; how can there be a permanent fix?

During the same press conference Mr. Conner apologized to Japan’s All Nippon Airlines and Japan Airlines which operate more than half of 787s in service. The Dreamliner has sold well in the Asia and Middle East markets. Airlines in these distance markets purchased the 787 because of its greater fuel efficiency and lower maintenance costs. With today’s high price of jet fuel less fuel consumption on major routes is a goal of all commercial airlines. Yet, Boeing’s problem with the 787 batteries has caused a delay in scheduled deliveries of the plane. Some customers are demanding some form of compensation for the delays for financial damages suffered. A relatively cheap battery might end up costing Boeing millions of dollars. And if the problem is not quickly resolved Boeing might start receiving cancellations of orders for the 787.

The battery problems have caused the shares of the airplane maker to drop. Many aviation and financial experts believe that the problem will not significantly impact the price of the company’s shares. An article appearing in the Christian Science Monitor on January 9, 2013 played down the seriousness of the problems with the batteries. According to the author of the piece, Daniel B. Wood, “the glitches don’t appear to be anything out of the ordinary for a new and highly complex aircraft.” The piece quotes Andrew Thomas, author of “Softy Landing, Airline Industry Strategy, Service and Safety” as stating that “every new complex collection of systems-and the Dreamliner is certainly that-will experience unknowns.” The electric plane that will need some flying time to work all of the bugs.

It is understandable that Boeing executives are in full damage control mode. Whether the short-circuiting problem is related to the wiring or the batteries themselves will definitely influence the magnitude of the financial downside of the battery fiasco. How the company deals with the public relations fall out from all of this might be more telling. According to a January 25, 2013 article in the New York Times investigators and Congressional oversight committees might want to consider how the Japanese company, GS Yuasa, was chosen to supply the lithium batteries. From what I have read GS Yuasa was awarded the contract strictly based its ability to do the job at the targeted price. However, according to the Times piece, Boeing “has long since been dogged by suspicious that in return for its awarding major contracts to Japanese companies, which also receives subsidies from

an ANA 787

Japan’s government, the country’s airlines buy Boeing aircraft almost exclusively.” Agreements and conventions that both the U.S. and Japan governments have signed require that aircraft purchases be based solely on the merits of the deal and not some form of “disguised payoffs.” The purpose of the law is to eliminate or reduce politics in the decision making process of purchasing aircraft. Yet, in this case, there does not appear to have been anything improper in awarding the battery contract to the Japanese firm. I think there is a simple explanation; Boeing understands how to do business in Japan. Airbus, Boeing’s only major competitor, will do and insinuate just about anything to be able to sell its plans to the Japanese airlines.