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Business

Outdated airline tech may mean more outages

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Opening sequence

Business

Outdated airline tech may mean more outages

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COMING UP:Outdated airline tech may mean more outages

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Transcript

00:00:00
>> Airlines will likely suffer more massive disruptions like the one that grounded nearly 2,000 Delta flights this week, because carriers have not invested enough in technology. Reuters correspondent Jeffrey Dastin.>> The reason it took so long for Delta's reservation system to return to normal, is that it’s based off of technology first developed in the 1960s before the internet age.
00:00:24
It's called Transaction Processing Facility, it was built by IBM in the 1960s to process of larger number of transactions accurately and very quickly. And while it's been updated a number of times by IBM in the subsequent decades, it still is, at least at its root, a very old system.
00:00:45
>> In recent years airlines have spent heavily to introduce new features such as automated check-in kiosks, real-time luggage tracking and slick mobile apps. But they have shied away from investing the many hundreds of millions of dollars it would cost to rebuild their systems from the ground up and thus, remain vulnerable to outages.
00:01:04
>> Let's say Delta or American can't get it's boarding passes from the website. So what they do is they tell their passengers service agents, the ones you ask questions of at the airport. These people have to actually go back into the original native systems that they are not as trained to use or they don't use as regularly.
00:01:29
So what ends up happening is everyone's sort of confused, things just take longer, things have to be done manually. Means that the airline can't keep the breakneck pace that they schedule their flights on.>> US and Canadian Airlines are projected to spend an average of 3% of their revenue on IT this year.
00:01:47
That's about $5 billion, but it's still a lot less than what's some other sectors like banking which spent 8%. Part of the challenge is that US airlines are under pressure from investors to boost stock prices. Even as economic travel overseas have reduced travel demand. Industry experts tell Daston that airlines would prefer to risk a failure that might cost $20 million to $40 million than invest $100 million in technology upgrades.