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This week, Delta Air Lines was forced to temporarily shut down flight operations after its computer system failed.

It took four days for the second largest airline in the world to recover from the disruption to its operation.

As a result, Delta was forced to cancel more than 2,000 flights while delaying thousands more.

Unfortunately, Delta is just the latest airline to suffer a catastrophic disruption to its service.

American, United, Southwest, and JetBlue have all been forced to temporarily ground its fleet in the past two years. 

This leads us to ask the question — why do airlines suffer mass shutdowns?

"There are two kinds of mass cancellations – strategic and non-strategic," Phil Derner, NYC Aviation founder and FAA certified flight dispatcher, told Business Insider in an interview.

A strategic mass cancellation occurs when the airline has the opportunity to plan out the action. For instance, when an airline plans for an incoming hurricane or blizzard by completing certain flights to move its crew and aircraft out of harms way while cancelling others. A non-strategic mass cancellation happens suddenly and without warning. 

"What happened to Delta this week was a non-strategic shutdown," Derner said. 

So, what's is going on at an airline when a mass cancellation event does occur?

The daily operations of an airline is a neatly coordinated series of crew and aircraft movements. As an airline transports its customers, it's also strategically shifting its crew and equipment to various parts of the network. 

As a result, when Delta's network was crippled by a computer outage this week, its crew and aircraft movement stopped along with the passenger traffic. 

In statement this week, Delta wrote:

When Delta doesn’t fly aircraft, not only do customers not get to their destination, but flight crews don’t get to where they are scheduled to be. When this happens, unfortunately, further delays and cancellations result. And flight crews can only be on duty for a limited time before rest periods are required by law. 

Flight crews – pilots and flight attendants – carry out their responsibilities in a rotation, a schedule of flights and hotel reservations, that is usually three or four days.

As cancellations occur, rotations become invalid. Multiplied across tens of thousands of pilots and flight attendants and thousands of scheduled flights, rebuilding rotations is a time-consuming process.

Airlines are in the business of making money. A flight cancellation could cost them tens of thousands of dollars. As a result, they prefer their planes to be up in the air generating revenue as much as possible. This means that the plane you are flying on is likely to have made as many as eight flights in one day depending on the duration of the trip. So if a plane gets grounded on its first flight of the day, there's a ripple effect down the line.

So when an inbound flight operated by a 400-seat jumbo jet is cancelled, the next flight waiting to use that aircraft will need to find a replacement if it wants to keep to the schedule. And if there's only a single 160-seat 737 available at the airport, then that flight is in jeopardy of delay or cancellation unless a replacement aircraft can be secured from another location. 

While airlines do keep a few spare aircraft (usually of the most common aircraft type used for routes to that particular airport) around for eventualities, they aren't enough to the cover the overflow of passengers from a mass cancellation event. 

This also applies for the crew. Even though airline such as Delta place pilots and cabin crew on standby throughout its global network just in case of an emergency, there's no way they could accommodate a shutdown of this scale. 

Large international airlines operate fleets that could feature more than a dozen different models of aircraft - each deployed for a specific mission. Unfortunately, not all pilots are certified to fly all planes. In order for a pilot to be legally permitted to fly an aircraft, he or she must be "type rated" on the model. This basically means that the pilot must be licensed to operate that specific aircraft. 

For instance, you are waiting for your delayed flight from New York to Paris on a wide-body Boeing 777. Even if your plane is at the gate, there may not be a crew available that's type rated for the aircraft. And even if there is a crew certified to fly the plane, the flight may still be canceled or delayed. 

Why?

Because the flight crew may not have enough duty hours left in their work day to complete the trip.

Pilot fatigue has been cited as a cause for some of the most devastating accidents in aviation history. As a result, the number of hours a pilot can be on duty is strictly governed by federal regulations under FAR Part 117 as well as labor contracts negotiated by the airline and the pilot's union. 

Strict duty hour limits also apply to the cabin crew. 

At the end of the day. When you can't fly, neither can the airline's crew and equipment. Rest assured, the airline wants to make that flight happen way more than you do. 

SEE ALSO: The airline industry has a massive problem — and there's no real fix

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NOW WATCH: Inside Delta's 2.7 million square-foot facility where they repair and maintain their massive fleet of airplanes

Blockchain technology is expected to change the way financial organizations conduct business with banks implementing distributed ledger technology (DLT) projects by 2017, according to the World Economic Forum. After 12 months of research which saw the WEF engage over 200 industry leaders and subject matter experts through interviews and multi-stakeholder workshops, the organization compiled a […]

The post Report: Blockchain to Rewrite the Financial Infrastructure’s Future appeared first on CCN: Financial Bitcoin & Cryptocurrency News.

In this opinion piece, contributor Ariel Deschapell asks, can bitcoin have decentralized governance without defining decentralization?

Russian authorities have gone back on their idea to penalize whoever is caught in bitcoin operations in the country, says a report by Russian news agency Interfax. Though Interfax referenced unnamed sources close to the Russian government’s financial departments, it suggested that representatives from the country’s Ministry of Finance, central bank, and other government bureaus […]

The post Russia Reverses Plan to Penalize Bitcoin Use appeared first on CCN: Financial Bitcoin & Cryptocurrency News.

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This month, the Korean government will launch a platform for financial institutions that will allow them to build services that automatically populate financial information for new customers, according to Korea Joongang Daily.

It looks like the platform will essentially serve as database of consumer financial information that is accessible via API. The platform will be managed by Korea Financial Telecommunications and Clearing Institute and Koscom Corporation and counts 16 banks and 25 brokerage firms as partners. Earlier this week, the UK's Competition and Markets Authority (CMA) released a report announcing that it would require banks to participate in a similar open banking initiative. 

Eliminating friction is one of the keys to fintech adoption. Consumers may know what frustrates them about their current financial services experience, but they don't necessarily invest time in seeking out alternatives. A formidable barrier to trying out new services is having to find and enter financial information.

Once that barrier is removed, it will be much easier to switch providers, forcing financial services companies to innovate in order to stay competitive. In addition, providing fintechs with access to the platform will allow them to devote more time and resources to developing great products, rather than developing data partnerships with legacy institutions. 

Like other countries around world, Korea is racing to attract capital to build a fintech ecosystem. Korea's economy has suffered recently due to a drop in tourism and falling exports. The government is taking number of actions to recover, including loosening regulations in the financial services industry to encourage the growth of fintechs, according to Yonhap News. In particular, nonbanks can now facilitate money transfers, helping to draw foreign money transfer firms into the country. Korea also plans to lift restrictive policies to allow internet-only banking.

We’ve entered the most profound era of change for financial services companies since the 1970s brought us index mutual funds, discount brokers and ATMs.

No firm is immune from the coming disruption and every company must have a strategy to harness the powerful advantages of the new fintech revolution.

The battle already underway will create surprising winners and stunned losers among some of the most powerful names in the financial world: The most contentious conflicts (and partnerships) will be between startups that are completely reengineering decades-old practices, traditional power players who are furiously trying to adapt with their own innovations, and total disruption of established technology & processes:

• Traditional Retail Banks vs. Online-Only Banks: Traditional retail banks provide a valuable service, but online-only banks can offer many of the same services with higher rates and lower fees

• Traditional Lenders vs. Peer-to-Peer Marketplaces: P2P lending marketplaces are growing much faster than traditional lenders—only time will tell if the banks strategy of creating their own small loan networks will be successful

• Traditional Asset Managers vs. Robo-Advisors: Robo-advisors like Betterment offer lower fees, lower minimums and solid returns to investors, but the much larger traditional asset managers are creating their own robo-products while providing the kind of handholding that high net worth clients are willing to pay handsomely for.

As you can see, this very fluid environment is creating winners and losers before your eyes…and it’s also creating the potential for new cost savings or growth opportunities for both you and your company.

After months of researching and reporting this important trend, Evan Bakker, research analyst for BI Intelligence, Business Insider's premium research service, has put together an essential report on the fintech ecosystem that explains the new landscape, identifies the ripest areas for disruption, and highlights the some of the most exciting new companies. These new players have the potential to become the next Visa, Paypal or Charles Schwab because they have the potential to transform important areas of the financial services industry like:

• Retail banking

• Lending and Financing

• Payments and Transfers
• 
Wealth and Asset Management

• Markets and Exchanges

• Insurance

• Blockchain Transactions


If you work in any of these sectors, it’s important for you to understand how the fintech revolution will change your business and possibly even your career. And if you’re employed in any part of the digital economy, you’ll want to know how you can exploit these new technologies to make your employer more efficient, flexible and profitable.

Among the big picture insights you'll get from The Fintech Ecosystem Report: Measuring the effects of technology on the entire financial services industry:

• Why financial technology is so disruptive to financial services—it will soon change the nature of almost every financial activity, from banking to payments to wealth management.
• The basic conflict will be between old firms and new—startups are re-imagining financial services processes from top to bottom, while incumbent financial services firms are trying to keep up with new products of their own.
• Both sides face serious obstacles—traditional banks and financial services firms are investing heavily in innovation, but leveraging their investments is difficult with so much invested in legacy systems and profit centers.
• Meanwhile, startups are struggling to navigate a rapidly-changing regulatory landscape and must scale up quickly with limited resources.
• The blockchain is a wild card that could completely overhaul financial services. Both major banks and startups around the world are exploring the technology behind the blockchain, which stores and records Bitcoin transactions. This technology could lower the cost of many financial activities to near-zero and could wipe away many traditional banking activities completely.

This exclusive report also:

• Explains the main growth drivers of the exploding fintech ecosystem.
• Frames the challenges and opportunities faced by incumbents and startups.
• Breaks down global and regional fintech investments, including which regions are the most significant and which are poised for the highest growth.
• Reveals which two financial services are garnering the most investment, and are therefore likely to be transformed first and fastest by fintech
• Explains why blockchain technology is critically important to banks and startups, and assesses which players stand to gain the most from it.
• Explores the financial sectors facing disruption and breaks them down in terms of investments, vulnerabilities and growth opportunities.
• And much more.

The Fintech Ecosystem Report: Measuring the effects of technology on the entire financial services industry is how you get the full story on the fintech revolution.

To get your copy of this invaluable guide to the fintech revolution, choose one of these options:

1. Subscribe to an ALL-ACCESS Membership with BI Intelligence and gain immediate access to this report AND over 100 other expertly researched deep-dive reports, subscriptions to all of our daily newsletters, and much more. >> START A MEMBERSHIP
2. Purchase the report and download it immediately from our research store. >> BUY THE REPORT

The choice is yours. But however you decide to acquire this report, you’ve given yourself a powerful advantage in your understanding of the fast-moving world of financial technology.

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Bitfinex customers who got socked for a 36 percent loss on account of the recent hack could have legal recourse against the Hong Kong exchange, according to lawyers from Kobre & Kim, a global law firm, CNBC reported. The Hong Kong exchange, due to the attack’s indiscriminate nature, opted to charge all customers 36 percent, […]

The post Lawyers: Legal Options Possible for Bitfinex Customers appeared first on CCN: Financial Bitcoin & Cryptocurrency News.

This story was delivered to BI Intelligence "Payments Briefing" subscribers. To learn more and subscribe, please click here.

Bank of America Merrill Lynch and HSBC have teamed up with the Infocomm Development Authority of Singapore (IDA) to test blockchain applications for global business-to-business (B2B) transactions, according to the International Business Times.

The firms have designed a proof of concept, using technology from the Hyperledger Project, that could take the place of letters of credit — the time-consuming and paper-heavy instruments used by importers and exporters to secure cross-border transactions, according to Reuters.

This is yet another way that the financial-services sector is looking to use blockchain — the distributed ledger technology known for powering cryptocurrency — to increase efficiency and security for a variety of processes. The technology could collectively save banks up to $20 billion annually by 2022, according to Santander.

Blockchain technology, which is best known for powering Bitcoin and other cryptocurrencies, is gaining steam among finance firms because of its potential to streamline processes and increase efficiency. The technology could cut costs by up to $20 billion annually by 2022, according to Santander.

That's because blockchain, which operates as a distributed ledger, has the ability to allow multiple parties to transfer and store sensitive information in a space that’s secure, permanent, anonymous, and easily accessible. That could simplify paper-heavy, expensive, or logistically complicated financial systems, like remittances and cross-border transfer, shareholder management and ownership exchange, and securities trading, to name a few. And outside of finance, governments and the music industry are investigating the technology’s potential to simplify record-keeping.

As a result, venture capital firms and financial institutions alike are pouring investment into finding, developing, and testing blockchain use cases. Over 50 major financial institutions are involved with collaborative blockchain startups, have begun researching the technology in-house, or have helped fund startups with products rooted in blockchain. 

Jaime Toplin, research associate for BI Intelligence, Business Insider's premium research service, has compiled a detailed report on blockchain technology that explains how blockchain works, why it has the potential to provide a watershed moment for the financial industry, and the different ways it could be put into practice in the coming years.

Here are some key takeaways from the report:

• Spending on capital markets applications of blockchain is expected to grow at a 52% compound annual growth rate (CAGR) through 2019, according to Aite Group, to reach $400 million that year.
• Banks and major financial institutions are working both collaboratively and independently to develop blockchain tech. Over 50 major financial institutions are involved with collaborative blockchain startups, like R3 CEV or Chain. And many are investing in the technology on their own as well.
• Putting blockchain to use for real-world transactions is likely not that far off. If working groups' tests are successful, firms could be using it to transact real value as early as the end of this year and we could see widespread industry application within the next few years. 

In full, the report:

• Examines the funding increases that are pouring into blockchain
• Assesses why blockchain is becoming so popular and what factors are driving up increased research and development
• Explains in full how blockchain technology work and what assets make it valuable and vulnerable
• Identifies pain points in the financial industry and profiles how various firms are using blockchain to solve them
• Demonstrates the challenges to mainstream adoption and their potential solutions

To get your copy of this invaluable guide, choose one of these options:

1. Subscribe to an ALL-ACCESS Membership with BI Intelligence and gain immediate access to this report AND over 100 other expertly researched deep-dive reports, subscriptions to all of our daily newsletters, and much more. >> START A MEMBERSHIP
2. Purchase the report and download it immediately from our research store. >> BUY THE REPORT

The choice is yours. But however you decide to acquire this report, you’ve given yourself a powerful advantage in your understanding of blockchain technology.

Join the conversation about this story »