America's Air Traffic System Is Broken. A $12.5 Billion Fix May Mostly Enrich One Company.
Flight delays hit a decade-long high in 2025. Radar went dark over nine states. Now billions in repair funding look set to flow to Palantir, a data company with deep government ties and no experience running air traffic control.
Key points
- One in four U.S. Flights was delayed, cancelled, or diverted in 2025, the worst rate in over a decade according to the U.S. Public Interest Research Group.
- On August 6, 2025, the Minneapolis Air Route Traffic Control Center lost radar and communications for roughly two hours, disrupting more than 1,100 flights across nine states.
- Congress authorised $12.5 billion for FAA upgrades in July 2025, but none of that money goes toward hiring more air traffic controllers.
- Palantir, a data-analytics company co-founded by Republican donor Peter Thiel, already holds multiple no-bid FAA contracts and is positioned to win a large share of the new funding.
- DOGE, the White House cost-cutting team run by Elon Musk, cut 400 FAA workers including maintenance technicians, without delivering any promised technology upgrades.
Two minutes of radar silence is a long time when you are responsible for every plane in nine states.
On August 6, 2025, the Minneapolis Air Route Traffic Control Center, which monitors 330,000 square miles of airspace across the upper Midwest, lost radar and radio contact for close to two hours. More than 1,100 flights were disrupted.
Two days earlier, a helicopter carrying President Donald Trump departed the White House. FAA rules require the pilots to alert Reagan National Airport so commercial planes are held. The alert never got through. Controllers cleared another aircraft for takeoff, and it came closer to the president's helicopter than the minimum safe distance permits. The White House said Trump was never in harm's way.
How did the system get this fragile?
Almost 90 percent of the country's air traffic control centres were already chronically short-staffed before 2025, and most of the technology inside them was rated by the FAA itself as "unsustainable" or "potentially unsustainable."
Earlier this year, Transportation Secretary Sean Duffy invited Elon Musk and his Department of Government Efficiency to overhaul the FAA. On X, Musk promised "rapid safety upgrades to the air traffic control system." As we reported in July, Musk later admitted his government role pulled his focus. At the FAA, his agency cut 400 employees, among them maintenance technicians at 18 separate control centres, while failing to deliver a single major technology improvement.
The result shows in the numbers. Tarmac delays, where passengers sit on a grounded plane and cannot leave, rose 64 percent compared with 2024. An estimated 2.4 million checked bags were lost or damaged on domestic routes alone.
So where is the $12.5 billion going?
Congress is not ignoring the crisis. In July 2025, the One Big Beautiful Bill Act set aside $12.5 billion for a full FAA overhaul, with roughly $5 billion earmarked for software upgrades.
Not one dollar of that $12.5 billion goes toward hiring controllers, the shortage air traffic workers themselves say is the most urgent fix.
Instead, much of the money looks likely to reach Palantir. The data-analytics company that Peter Thiel co-founded and currently chairs is now deeply embedded in FAA systems. Our earlier story on Palantir's £330m in NHS contracts showed the same pattern playing out in Britain: deep integration first, dependency second.
| Contract or role | Year | Value |
|---|---|---|
| No-bid: AI runway collision tool | 2025 | Undisclosed |
| No-bid: AI grants management system | 2025 | Undisclosed |
| FAA Foundry operating system contract | 2025 | Undisclosed |
| SMART national airspace bid (finalist, lost) | 2025 | Up to $875 million |
| Total U.S. Federal contracts (projected) | 2026 | Over $1.5 billion |
Palantir's Foundry, a system that pulls data from many sources into one place for analysis, has run inside the FAA since 2024. All of the agency's data now flows through Palantir infrastructure. When the FAA recently opened bidding for a new AI integration contract, the specification named two proprietary Palantir technologies. Palantir won.
The one major contract it lost, the $875 million SMART airspace management tool, went to a Boston startup called Air Space Intelligence. Four of that startup's senior team are former Palantir employees.
What does this mean for passengers?
Controllers who spoke to The Verge, on the condition their names would not be published, are blunt: the technology spending will not fix the real problem.
"These facilities have been understaffed for decades," one said. "If two controllers can't make it to work, that's 40 to 60 percent less staff."
The FAA's 2026 budget includes $239 million to support new controller hiring. Secretary Duffy promoted a campaign called "Level Up Your Career" aimed at recruiting gamers to train as controllers. It drew 2,000 applications. But 30 percent of trainees wash out, and full certification takes years.
For anyone with a flight booked: delays are likely to continue. The money meant to fix the system is flowing toward software contracts for a company with no history in air traffic control, while the people who actually keep planes apart stay short-handed.
One honest takeaway: The staffing gap is the story here, and the bill does nothing about it. Book morning flights, choose direct routes, carry essentials in your hand luggage. No software contract closes a staffing hole before your next trip.
