Who Will Pay for the 787's Grounding?

After 20 years working in the travel industry, and 15 years writing about it, Tim Winship knows a thing or two about travel. Follow him on Twitter @twinship.

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Things are looking up for Boeing’s beleaguered 787 Dreamliner jet.

The FAA has endorsed the company’s proposed fix for the plane’s battery issues. And most of the grounded 787s are expected to be retrofitted and back in service by the end of May or early June.

But the three-month grounding was not just a black eye for Boeing, and for the FAA which certified the plane, it had real financial consequences for the airlines that operated the aircraft and were forced to cancel flights or downgrade to smaller planes. And at least some of those financial hits are likely to ultimately be absorbed by Boeing itself.

In the cases of All Nippon Airways and Japan Airlines, which together own and operate 24 of the 50 in-service 787s, the financial toll will total around $110 in lost operating profits, according to Reuters.

The 787-related losses were disclosed yesterday, when the two carriers reported their operating results for the first quarter of 2013.

How Boeing will compensate the airlines for their losses remains to be seen. Those discussions have been deferred until the planes are back in the air.

There’s little precedent for such a post-certification grounding, and it’s likely that the 787 sales contracts don’t include provisions for compensation in the event of losses due to design-related issues.

So there are no easy answers to the questions of how and how much to compensate the affected airlines. There could even be a question as to the locus of responsibility.

The battery system that caused the groundings, and the financial losses, was reviewed and approved by the FAA. That agency clearly bears some responsibility for failing to detect the system’s disposition to fail. Does that moral responsibility translate into financial responsibility as well?

Reader Reality Check

Should Boeing compensate the airlines for their losses?

What about the FAA’s responsibility?

This article originally appeared on FrequentFlier.com.

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