India File: Air India crash report reveals a new mystery

July 15 - By Ira Dugal, Editor Financial News, with global Reuters staff

Indian investigators' preliminary report on the crash of an Air India flight that killed 260 people has put the focus squarely on the pilots and the aircraft's fuel switches. We wrap up the latest developments and new questions raised about commercial aviation's worst accident in more than a decade.

And India remains conspicuously absent from the list of countries receiving tariff letters from U.S. President Donald Trump. Scroll down for more on that.

THIS WEEK IN ASIA

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AIR INDIA CRASH PROBE

A preliminary report from India's probe into last month's deadly Air India crash has ruled out some possibilities while raising new ones - with the focus on a pair of switches that cut off the engines' fuel supply just seconds after take-off.

Did one of the pilots on the Boeing 787 flip the switches from "run" to "cut-off"? If so, why? Was there some other factor behind this deadly slip-up?

The report offered no hints on the answers, leaving a new mystery for investigators to unravel while regulators in several countries have begun checks of the fuel supply switches on their Boeing aircraft.

The Indian authorities gave no recommendations for action by operators of Boeing 787 Dreamliner jets or GE engines.

Read this detailed story on the Aircraft Accident Investigation Bureau's report, and this explainer on the crucial role of the fuel switches.

The crash, which killed all but one of the 242 on board and another 19 people on the ground, was the worst aviation disaster in a decade. The preliminary report had been keenly awaited for possible questions or information relating to the Dreamliner's safety record.

The probe is far from over, Air India Chief Executive Campbell Wilson said in an internal memo seen by Reuters.

QUESTIONS OVER PILOTS AND FUEL SWITCHES

Attention has now shifted to the pilots' actions in the seconds after take-off, and to the fuel switches themselves.

The report made it clear that a momentary change in the position of the switches deprived the plane of fuel at a crucial stage, leading to the crash.

"In the cockpit voice recording, one of the pilots is heard asking the other why did he cut off. The other pilot responded that he did not do so," the report said.

Read here for the timeline of events in the cockpit.

Who were the pilots of the flight? Read about them here.

The switches flipped one second apart, the report added, roughly the time it would take to shift one and then the other, according to U.S. aviation expert and former pilot John Nance.

He added that a pilot would normally never turn the switches off in flight, especially when the plane is starting to climb.

The Airline Pilots' Association of India, in a statement, objected to the report's focus on the pilots.

"The tone and direction of the investigation suggest a bias toward pilot error. We categorically reject this presumption and insist on a fair, fact-based inquiry," the pilots' lobby said.

It also drew attention to a 2018 bulletin by the U.S. Federal Aviation Administration related to fuel switches in the Boeing 737, which are similar to those in the 787. Reports from operators had indicated that "the fuel control switches were installed with the locking feature disengaged".

The pilots' lobby called for clarity on whether the recommendations of the service bulletin were ever implemented.

The probe's preliminary report said the advisory on the fuel switches was not seen as indicating an unsafe condition that warranted specific instructions.

FAA and Boeing rejected suggestions that there were issues with the fuel switches.

On Sunday, The U.S. Federal Aviation Administration and Boeing issued notifications that the fuel switch locks on Boeing planes were safe, Reuters reported, citing documents and sources with knowledge of the matter.

The FAA's notification to Civil Aviation Authorities said: "although the fuel control switch design, including the locking feature, is similar on various Boeing airplane models, the FAA does not consider this issue to be an unsafe condition that would warrant an Airworthiness Directive on any Boeing airplane models, including the Model 787."

In the meantime, authorities in India and South Korea have asked their airlines to examine fuel switches in accordance with the 2018 advisory.

What would you like to read about in the India File? Write to me at ira.dugal@thomsonreuters.com.

TRADE TENSIONS ESCALATE

U.S. President Donald Trump has sent tariff warnings to 25 trading partners, including the European Union and Mexico which were threatened over the weekend with a 30% tariff on their exports.

Conspicuously absent from that list was India.

Indian negotiators are back in the U.S. for another round of talks, centred on disagreements over auto components, steel and farm goods.

With most other big U.S. trade partners having received tariff letters, India will be looking to seal a deal that puts its tariff rate below the 25-30% imposed on Vietnam, Bangladesh and Sri Lanka - countries it competes with in textiles and other sectors.

Tariffs are starting to become a significant revenue contributor for the U.S., with collections so far exceeding $100 billion.

Sign up for the Reuters Tariff Watch newsletter here.

MARKET MATTERS

Wall Street trading firm Jane Street has deposited $567 million in an escrow account so it can resume trading in India.

Confirming the development, the Securities and Exchange Board of India (SEBI) said the funds, equivalent to what the regulator had termed as "unlawful gains", were deposited without prejudice towards Jane Street's rights and remedies in law.

The regulator said Jane Street's request to remove restrictions on its activities is under review.

SEBI's July 3 order had barred Jane Street from the Indian markets, leading to a drop in activity in the country's options trade.

In four of the five sessions that followed the order, the value of index options premiums in trading on the NSE and BSE exchanges declined on a week-on-week basis.

On Thursday, at the weekly derivatives expiry on the NSE - India's largest exchange - options premium turnover was down one-quarter from the previous week.

Read more in this report by Reuters journalist Bharath Rajeswaran.

($1 = 85.7120 Indian rupees)