Meltdowns In The Airline Industry And How To Fix Them

Key takeaways

• The Federal Aviation Administration had to suspend flights on the morning of January 11 due to issues with the system that notified pilots of possible dangers in the air and on the ground. The suspension lasted from about 7:30 a.m. to 9 a.m. eastern time as the FAA hurried to fix the problem by rebooting the system.
• The government has increased scrutiny on airlines due to all of the flight cancellations. The airlines are growing increasingly frustrated with the FAA for the lack of staffing in the air traffic controller space.
• Passengers are increasingly frustrated with the aviation meltdowns as cancellations almost feel like the new standard. We look at what can be done to fix the airline industry that’s plagued with staffing issues and outdated technology.

There was another meltdown in the airline industry just not too long after hundreds of flights were canceled during the holiday season. On January 11, the Federal Aviation Administration (FAA) had to reboot the entire system that’s responsible for notifying pilots of safety issues in the air and on the ground. This led to thousands of delays and cancellations across the nation as passengers found themselves stranded at airports.

It’s worth mentioning that this was the first time since the 9/11 attacks that the U.S. airspace was completely shut down. As one can imagine, this led to plenty of chaos and confusion.

We’re going to look at the recent meltdowns in the airline industry and what could be done to fix them. Plus, here’s how Q.ai can help you get invested in any industry, regardless of their ups and downs.

The FAA meltdown

On January 11, the FAA had to suspend all U.S. flight departures in the early hours of the morning due to an issue with the Notice to Air Mission system. This mechanism is designed for sharing safety information with pilots. Airlines had to cancel or delay flights due to the ongoing congestion at airports.

Later that evening, the FAA released an official statement confirming that it wasn’t a cyber attack:

“The FAA is continuing a thorough review to determine the root cause of the Notice to Air Missions (NOTAM) system outage. Our preliminary work has traced the outage to a damaged database file. At this time, there is no evidence of a cyber attack. The FAA is working diligently to further pinpoint the causes of this issue and take all needed steps to prevent this kind of disruption from happening again.”

The NOTAM system was impacted, and this mechanism is crucial as it sends alerts to pilots about conditions that would possibly impact flight safety. This system is different from the air traffic control mechanism that‘s used to keep planes at a safe distance from each other. Both of these are important tools for air safety.

The good news was that there was no evidence of a cyberattack, and the issue was resolved within 90 minutes as the systems were rebooted.

By 6 p.m. ET, there were 9,500 flights to, from and within the U.S. were delayed, and over 1,300 flights were canceled as airlines struggled to resolve the chaos. The ground stop for 90 minutes was due to an “abundance of caution.” It was reported that overnight irregularities in the safety messages sent to pilots presented a cause for concern.

Reaction to the FAA meltdown

As one would expect, this outage caused plenty of outrage across the country. Here’s a quick glance at some of the immediate reactions:

• Airlines issued travel waivers. Airlines had to respond by offering travel waivers to passengers who had flight issues. The financial repercussions of this won’t be identified until the financial results are reported for the first quarter.
• Passengers want answers. As one might imagine, it’s frustrating for airline passengers to have to deal with frequent delays and cancellations.
• Airlines are calling for FAA system upgrades. Last year, we saw government officials blame airlines for flight cancellations and poor treatment of passengers. This time around, airline leaders are placing the blame on the FAA for the archaic technology. Airline leaders are hoping for an increase in funds invested in the FAA’s system.

When did the meltdown begin?

Southwest Airlines came under fire from the U.S. government last month about the unacceptable cancellations as over 17,000 flights were called off during the last few days of the year. This was the first time that the term “meltdown” was introduced by Transportation Secretary Pete Buttigieg. The flight issues caused outrage nationwide, and President Joe Biden tweeted that airlines need to be held accountable moving forward.

Southwest CEO Bob Jordan informed investors that this meltdown could cost the company up to $825 million. Southwest also announced that they would be allocating about $1 billion to upgrade the IT systems that desperately need an overhaul. The carrier has also hired Oliver Wyman, a transportation consulting firm, to see what went wrong.

The state of the airline industry

Air travel has been in a unique position in post-pandemic life. During COVID-19, airlines had to scale back as there were travel restrictions imposed. Then when the travel restrictions were lifted, there was an unprecedented surge in demand for travel.

Since we already discussed the outdated technology in place, here are some of the major issues with the airline industry that need to be addressed to avoid further meltdowns.

Flight cancellations have become more common

Flight delays and cancellations need to be addressed first. A report came out last summer revealing that airline cancellations had surpassed pre-pandemic levels. FlightAware’s flight-tracking website revealed that U.S.-based planes had canceled 128,934 flights from January to July. This figure was up about 11% from pre-pandemic levels.

With the Southwest meltdown in December and the recent FAA debacle, the figures for flight cancellations in the last month alone are going to be frightening.

Staffing issues continue to plague the airline industry

We heard about the pilot shortage crisis last year and overall staffing concerns. The pilot shortage in 2022 became a serious concern when it was revealed that the industry was short by about 8,000 pilots and airlines even opened up training schools to help with adding to the shortage.

During the pandemic, many airlines offered early retirement packages to employees to encourage them to leave the workforce. By May of 2020, about 100,000 employees from American Airlines, Delta Air Lines and United Airlines had accepted offers to leave. Airlines were struggling to stay afloat due to travel restrictions, and they felt that they had to decrease the staffing budget to match the decrease in demand.

How can these airline meltdowns be fixed?

What can be done about these airline meltdowns? While many passengers have become increasingly frustrated with this industry, it’s important that we look at what can be done to fix these issues to avoid further airline meltdowns in the future.

Overhaul the aging IT system

Many critics are quick to point out that the IT system needs to be modernized. According to comments from government officials, the FAA system that led to the meltdown is over 30 years old, and it’s six years away from a possible update. This is completely unacceptable, as technology is always changing, and many of the largest tech global tech companies have embraced the power of artificial intelligence. While Transportation Secretary Pete Buttigieg has agreed that upgrades are necessary, there are no immediate plans to overhaul the system as far as we know.

It’s time for the government to invest heavily in the airline industry to prevent these issues from occurring again. In the case of Southwest, the issues in December could’ve likely been avoided had the company upgraded its systems. It was reported that the outdated scheduling system couldn’t automatically shift when the weather conditions caused problems.

Regulatory scrutiny

The industry needs some sort of scrutiny and accountability measures to ensure that flights don’t get canceled. Many people expressed frustration with airlines after the $54 billion taxpayer bailout didn’t lead to an increase in spending on investing in infrastructure. While President Biden hinted at accountability for airlines to prevent further issues in the future, we desperately need to see some government intervention.

Increased staffing

While it’s difficult to reverse course on early retirement since many former employees likely won’t be excited about the potential of returning to work, there needs to be immediate action when it comes to staffing.

For example, last summer, the air controller union president criticized the FAA for not keeping up with hiring air traffic controllers. President of the union, Rich Santa, pointed out how the FAA had 1,500 fewer total controllers on board in 2022 compared to 2011. The airline industry needs to hire more pilots and staff, while the FAA needs to bring in more air traffic controllers to avoid staffing concerns.

We understand that these airline changes won’t happen overnight, but something has to be done to improve the process so that passengers don’t get stranded.

How should you be investing?

With travel returning in the post-pandemic world, it may be tempting to invest in this sector. However, broader macroeconomic issues and a disconnect between the airlines and government bodies may make this a poor time to invest in this space.

The good news is that if you’re looking to invest your money, Q.ai can help. Our artificial intelligence scours the markets for the best investments for all manner of risk tolerances and economic situations. Then, it bundles them up in handy Investment Kits that make investing simple and strategic. Best of all, you can activate Portfolio Protection at any time to protect your gains and reduce your losses, no matter what industry you invest in.

The bottom line

We will be paying close attention to the earnings reports from the major airlines as the struggles from the past year could prove to be pretty expensive. In order for airline meltdowns to become a thing of the past, it’s clear that staffing concerns must be addressed along with an upgrade in the systems used by the FAA and the airlines.

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