What’s Good for the Goose: Delta Airlines, CrowdStrike, and the Double Standard

August 02, 2024 by David Danto

After the well-publicized recent outage, Delta Airlines has found itself in an interesting situation. The airline’s operations were severely hampered due to the issues linked to its cybersecurity provider, CrowdStrike. According to Delta’s CEO, this little tech hiccup may have cost the airline a staggering $500 million. Now, according to multiple news reports, Delta has hired high-powered attorney David Boies, presumably to pursue damages. However, there’s a twist in the tale that bears more scrutiny. What’s good for Delta should be good for its passengers.

The CrowdStrike Conundrum

The outage at CrowdStrike, a leading cybersecurity firm, wreaked havoc on Delta’s operations, grounding flights and causing widespread chaos. Delta’s CEO was quick to point out the massive financial hit, pegging the losses at nearly half a billion dollars. With such a significant loss, it’s no surprise Delta is looking for some legal recourse. But here’s where things get interesting: CrowdStrike, like many service providers, likely has a contract with Delta that includes clauses limiting its liability. The general CrowdStrike terms shown online say:

“…CROWDSTRIKE SHALL NOT BE LIABLE TO SOFTWARE USER (UNDER ANY THEORY OF LIABILITY, WHETHER IN CONTRACT, STATUTE, TORT OR OTHERWISE) FOR: (A) ANY LOST PROFITS, REVENUE, OR SAVINGS, LOST BUSINESS OPPORTUNITIES, LOST DATA, OR SPECIAL, INCIDENTAL, CONSEQUENTIAL, OR PUNITIVE …”

This brings us to the interesting parallel. While Delta’s CEO might argue that the contract with CrowdStrike is insufficient given the scale of the damages, one has to wonder how Delta feels about the contracts it imposes on its own customers.

The Airline Passenger Predicament – A Double Standard

Enter the Contract of Carriage, the document that governs the terms and conditions of air travel for passengers. This fine print masterpiece is a legal shield for airlines, allowing them to avoid significant liability when things go wrong. If your flight is delayed or canceled, you might get a refund or a meal voucher if you’re really lucky, but that’s about it. Missed your best friend’s wedding because your flight was canceled last minute? Too bad. Lost a crucial business deal because you were stuck at an airport? Sorry, not their problem.

These contracts typically limit compensation to a refund of the ticket price, regardless of the actual damages incurred by passengers.

Delta’s situation with CrowdStrike highlights a glaring double standard in the world of contracts. When Delta suffers massive losses due to a third-party service failure, it seems to be preparing to seek substantial damages, even though it likely agreed to a contract with limitations on liability. Yet, when passengers face significant personal or financial losses due to Delta’s operational failures, the airline hides behind its Contract of Carriage to limit its liability. This seems to be a classic case of “what’s good for the goose is good for the gander” – or at least, it should be.

It begs the question: shouldn’t passengers have the same justification to pursue substantial damages when their losses far exceed the airline’s limited liability? If Delta believes that the terms of its contract with CrowdStrike are insufficient to cover its massive losses, then it’s only fair that it accepts any passengers’ claims that the limited compensation offered by airlines under the Contract of Carriage is also insufficient.

The Need for Change

It’s high time for a reevaluation of these contractual terms. Just as Delta is prepared to challenge the limitations in its contract with CrowdStrike, passengers should have the ability to seek fair compensation when airlines fail to deliver. The current system is heavily skewed in favor of airlines, leaving passengers with little recourse when their travel plans go awry.

Perhaps it’s time for a regulatory overhaul that levels the playing field. If airlines are going to hold their service providers accountable for significant losses, then they should be prepared to offer passengers more than just a token refund when flights are delayed or canceled. I’m not suggesting airlines be subject to a lawsuit from every unsatisfied passenger, but the continuously eroding quality of commercial air travel will only be stemmed if airlines are held to a standard that is managed and regulated by a third party. Clearly, they can no longer be trusted to ‘do the right thing’ when they very adversely affect their passengers’ plans or experiences.

Far Greater Implications

This of course goes beyond airlines. Is the concept of liability limitations now something that society is willing to look past whenever the damages pass an undefined level of “big?” For one speculative example in our communications space, residential telephone services used to be provided by extremely stable copper wires to everyone’s homes. Phones used to work just fine even during power failures. Now telephone service is typically delivered via fiber – which requires in-home power. These days, providers frequently omit installing in-home backup batteries altogether. Also, mobile phone towers only have a few hours of battery life before they shut down in a power outage.

If my 911 call doesn’t go through during such an outage should I be able to sue my mobile and/or landline providers? Wouldn’t a severe injury or heaven-forbid death be their responsibility regardless of what any contract says? Would the telco then sue the power company? It’s pretty easy to see how this ‘bigger issue than the limitations cover’ can become a slippery slope. We’re focused on Delta’s actions today, but any judgment that could break the Delta-CrowdStrike contract provisions would likely have enormous ramifications.

This Will Be Interesting

If Delta pursues a legal battle with CrowdStrike it should be a wake-up call for the airline industry. If that happens it will be difficult for Delta not to take a page out of their own playbook and start offering passengers the kind of protections beyond contractual limitations they seem to expect from their service providers. After all, what’s good for the goose is good for the gander.

So the next time you’re stuck at an airport, missing out on a once-in-a-lifetime event, just remember: if Delta can fight for substantial damages regardless of any contract, so should you. If they’re powerful enough to circumvent the limitations in a contract, then they’ll need to be forced to remember that “With great power comes great responsibility.” It’s time for airlines to shoulder their fair share of responsibility.