In short: The FAA is developing SMART (Strategic Management of Airspace Routing Trajectories), an AI system that would extend air traffic conflict prediction from 15 minutes to two hours, with Palantir, Thales, and Air Space Intelligence competing for the contract. The project follows the LaGuardia crash that exposed controller overwork and aging systems, and sits within a $32.5 billion modernisation programme as the agency replaces 612 outdated radar systems and recruits 1,200 new controllers in fiscal 2026.

The Federal Aviation Administration is building an AI system called SMART that would allow air traffic controllers to predict and resolve flight conflicts up to two hours before they happen, replacing a planning window that currently extends just 15 minutes. Three companies are competing for the contract: Palantir, Thales, and Air Space Intelligence. Transportation Secretary Sean Duffy confirmed the project and the three bidders on 17 April, with a press event scheduled for 21 April to provide further details.

SMART, which stands for Strategic Management of Airspace Routing Trajectories, uses high-fidelity 4D modelling to anticipate bottlenecks and schedule conflicts before aircraft leave the ground. The system would shift air traffic management from reactive to predictive, addressing the fundamental problem that the current infrastructure was designed for a lower volume of flights and relies on controllers making real-time decisions with limited forward visibility. The FAA has said the system could be operational in some form later this year.

The three bidders

Palantir Technologies brings the deepest government relationship of the three. The company’s revenue guidance for 2026 is approximately $7.2 billion, representing 61% growth, driven by a $10 billion ceiling-value Army contract signed in July 2025 and expanding partnerships with GE Aerospace and Airbus. Its government revenue grew 70% year over year in Q4 2025. Palantir’s pitch for aviation AI is an extension of its core business: ingesting vast quantities of operational data and presenting it in decision-support interfaces that government users can act on without needing to understand the underlying models.

Thales, the European aerospace and defence firm, has more than 85 years of supplying air traffic management systems to the FAA and the Department of Defense. More than 99% of instrument landing systems at US airports use Thales equipment. The company’s TopSky platform is already embedded in the aviation infrastructure that SMART would need to integrate with, giving it an incumbent advantage that the other two bidders lack.

Air Space Intelligence, a Boston-based startup backed by Andreessen Horowitz, is the smallest competitor but arguably the most relevant. Its Flyways AI platform already manages over 40% of all US air traffic through partnerships with major airlines, using the same kind of 4D modelling and optimisation that SMART requires. ASI recently announced a partnership with Joby Aviation to integrate electric air taxis into the national airspace, positioning the company at the intersection of current air traffic management and the next generation of aviation.

Why this matters now

The urgency behind SMART is not abstract. On 22 March, Air Canada Express Flight 8646 collided with a fire truck on the runway at LaGuardia Airport. The investigation found that the air traffic controller involved was simultaneously serving as tower controller and clearance delivery controller, and that the automated runway safety system failed to alert because it could not create a confident track when vehicles merged near the runway. The incident crystallised a problem that the aviation industry has been warning about for years: controllers are overworked, the technology they rely on is outdated, and the margin for error is shrinking as traffic volumes increase.

The FAA has received $12.5 billion from Congress for air traffic control modernisation and estimates it needs an additional $20 billion to complete the overhaul. The agency is replacing 612 outdated radar systems, migrating its NOTAM system to a cloud-based platform, and recruiting controllers at an accelerated pace, having hired nearly 1,200 new controllers in fiscal 2026 so far, roughly half its annual target. FAA Administrator Bryan Bedford, who was confirmed by Congress and sworn in last July, has made SMART a central pillar of the modernisation programme.

DOGE, Elon Musk’s Department of Government Efficiency, has also inserted itself into FAA operations. DOGE personnel have visited air traffic control facilities to evaluate operations, and Musk has said the initiative will make “rapid safety upgrades” to air traffic control systems. A separate initiative called Project Lift is directing FAA funds toward upgrading network communications. DOGE is scheduled to end operations on 4 July, though a successor entity will continue.

The contract dynamics

The competition between Palantir, Thales, and Air Space Intelligence reflects three distinct approaches to government AI procurement. Palantir offers a platform that can be configured for any government use case, backed by extensive security clearances and institutional relationships. Thales offers domain expertise and an installed base that no competitor can match. ASI offers a purpose-built aviation AI platform that is already handling a significant portion of the traffic the FAA is trying to manage.

The FAA’s history with technology modernisation is not encouraging. The agency’s last major technology overhaul, the NextGen programme, took more than a decade and cost billions more than originally projected. The air traffic control workforce has been resistant to automation that threatens to change established workflows, and procurement timelines in government aviation are measured in years, not months. SMART’s promise that it could be operational later this year suggests either a genuinely compressed timeline or a demonstration version that falls short of full deployment.

For Palantir, the FAA contract would extend its government portfolio into a critical civilian agency and support the revenue growth trajectory that has made it the most expensive stock in the S&P 500 at roughly 120 times sales. For Thales, it would modernise a relationship that has sustained its US aviation business for decades. For Air Space Intelligence, it would validate an approach that has already proven itself in the commercial aviation sector and position the company as a central piece of national airspace infrastructure.

The stakes are higher than any individual contract. The US air traffic control system manages roughly 45,000 flights per day across the most complex airspace in the world. The controllers who run it are stretched thin, the technology they use predates the smartphone, and the safety margins that have made commercial aviation extraordinarily safe are being tested by volume growth, staffing shortages, and the kind of cascading failures that the LaGuardia incident exposed. SMART is a bet that AI can close the gap between what the system was designed to handle and what it is being asked to do. The question is whether any of the three companies competing for it can deliver on that promise at the speed the FAA now requires.