From RealClear Markets
Someday, more than a year after its second disastrous crash, the grounded Boeing 737 MAX will return to the skies. But will it be awash in empty seats when it does so? If recent surveys are to be believed, the answer is clearly yes. A December 2019 poll conducted by Bank of America estimated that only 20% of Americans would readily board the relaunched MAX. (This figure excludes the 50% of respondents who had not heard of the MAX controversy, but one assumes that these people rarely if ever fly.). Boeing’s own surveys in December 2019 imply that more than 40% of potential air travelers now plan to steer clear of the MAX. Montana Senator Jon Tester probably spoke for many when he declared that “I would walk before I was to get on a 737 MAX.”
To be sure, discrepancies often arise between what people tell pollsters and what they actually do. But is that likely to occur here? In fact, one can make a plausible case both for and against a large passenger boycott of the revived MAX. It is useful to consider the arguments on both sides, and then to hazard a best guess about what might happen.
Why Might Passengers Reboard the MAX?
That surveys need not be taken at face value was illustrated recently in the context of aviation. After a bloodied dentist was dragged in 2017 from a United Airlines flight, people aware of the incident told pollsters that they would overwhelmingly choose American Airlines over United, all other factors equal (79% to 21%). 44% of respondents went further and said that, rather than fly United nonstop, they would pay 30% more and fly one-stop on another carrier. In the event, however, the actual boycott was so small as to be statistically undetectable. Instead of declining, United passenger traffic and profits both increased.
Read the full post at RealClear Markets.
Arnold Barnett is the George Eastman Professor of Management Science and a Professor of Statistics at the MIT Sloan School of Management.