SpaceX’s Starlink could have some advantages over Verizon in bid for FAA contract takeover, experts say. It could also trigger a slew of conflict-of-interest lawsuits from competitors

Sasha Rogelberg

<ul>
<li>Elon Musk’s Starlink may get a contract originally awarded to Verizon by the Federal Aviation Administration to overhaul its communications technology. Starlink’s satellite communication gives it some advantages over the FAA’s current fiber optics infrastructure. Switching the contract, however, could raise conflict-of-interest concerns, including from competitors.</li>
</ul>



SpaceX’s potential contract with the Federal Aviation Administration to provide Starlink service could help the regulator update some long-outdated technology. It could also create a conflict-of-interest nightmare.<div class="paywall-selector"></div><div class="paywall">



The FAA is considering ending its $2.4 billion contract with Verizon and instead giving it to Elon Musk’s <a href="https://fortune.com/company/spacex/" target="_blank">SpaceX</a>, the <a href="https://www.washingtonpost.com/business/2025/02/26/musk-starlink-doge-faa-verizon/">Washington Post reported</a> Wednesday. The contract, which began in 2023, would help the FAA update the platform air traffic control facilities use to communicate with each other. Earlier this week, the FAA confirmed Musk had <a href="https://fortune.com/2025/02/25/elon-musk-begins-testing-his-starlink-terminals-in-the-u-s-airspace-system/">approved shipments</a> of 4,000 Starlink satellite-communication terminals to the regulator and that it was testing one in New Jersey and one in Alaska.



Amid swirling reports of Starlink’s increased footprint at the FAA, Musk has touted his own technology and ramped up criticism of the regulator, calling the current state of air traffic control technology “extremely dire.” He said in an X post Thursday, “The FAA assessment is single digit months to catastrophic failure, putting air traveler safety at serious risk.”&nbsp;



He also said the Starlink terminals sent to the FAA were at no cost to the taxpayers and erroneously claimed Verizon’s communications systems were “breaking down very rapidly.” He later clarified that L3Harris, behind the previous communications system, was responsible for the aging tech. L3Harris did not respond to Fortune’s request for comment.



&#8220;We are at the beginning of a multi-year contract to replace antiquated, legacy systems,” Verizon spokesperson Kevin Israel told Fortune in a statement. “Our teams have been working with the FAA&#8217;s technology teams and our solution stands ready to be deployed. We continue to partner with the FAA on achieving its modernization objectives.&#8221;



The FAA and SpaceX did not respond to Fortune’s requests for comment.



<h2 class="wp-block-heading">Airline safety isn’t in ‘crisis mode’</h2>



Despite Musk’s claims, airline safety is not in crisis, according to aviation experts. Hassan Shahidi, president and CEO of the aviation safety nonprofit Flight Safety Foundation, said the FAA’s technology updates come from years of looking to improve its infrastructure, not to prevent imminent disaster.



“There isn&#8217;t anything that is crisis mode in terms of that everything has to be done tomorrow,” Shahidi told Fortune. “FAA professionals have prioritized the way in which the modernization of these communications will need to happen over a period of time.”



To be sure, the FAA has still dealt with a series of safety incidents, including a mid-air collision between a U.S Army helicopter and commercial jet last month that <a href="https://fortune.com/2025/01/29/plane-collides-with-helicopter-crashes-near-dcs-reagan-airport/">killed 67 people</a>. And earlier this week, airplanes at Washington’s Ronald Reagan National Airport and Chicago’s Midway International Airport both <a href="https://fortune.com/2025/02/27/american-airlines-plane-calls-off-landing-dc-avoid-jet-taking-off/">aborted landings</a> in order to avoid collisions. Last year, there were 1,474 near-miss incidents, <a href="https://www.faa.gov/newsroom/statements/accident_incidents">according to the FAA</a>, 17% fewer than in 2023.



Shahidi does believe the FAA’s technology needs a tune up. Its legacy infrastructure is about 20 years old, he said, and it’s experiencing bandwidth issues and outdated encryption. Though its new tech is not yet operational, Verizon has begun the updating process, which the FAA contract says will take 10 years.



“It&#8217;s not going to be done tomorrow,” Shahidi said.



<h2 class="wp-block-heading">Where Starlink has the leg up on competition</h2>



There are certainly reasons why a contract with Starlink would be appealing to the FAA, Shahidi said. Right now, the only way to communicate over oceans is through satellite communications (satcom), which the FAA already has some technology for. Satcom, such as the broadband technology Starlink offers, provides global internet coverage and is reliable.



However, satcom’s consistent coverage often comes at the expense of latency, or the time it takes for a signal to travel from one location to another. In the instance of air traffic controllers, who need to exchange information without lag, fiber optic technology like the kind Verizon was tapped to deploy may have the advantage versus satcom.



Given the different strengths of the technologies, the FAA could use both companies, though Shahidi warns the process of determining where those technologies are best suited could cost precious time in the long pursuit of modernization.



Verizon, for its part, seems <a href="https://fortune.com/2025/02/25/elon-musk-begins-testing-his-starlink-terminals-in-the-u-s-airspace-system/">open to sharing responsibilities</a> with Starlink. Verizon executive vice president Joe Russo, in response to reports of the FAA trialling some Starlink technology, proposed co-existing with Musk’s company, particularly if Starlink was working on weather application services.



“I think that can be complementary to what we’re trying to build to really run the FAA infrastructure,” Russo said.



<h2 class="wp-block-heading">Conflict-of-interest concerns</h2>



If Starlink&nbsp; gets the FAA contract, Democrats worry Musk’s ties to Starlink—and his sprawling, albeit unclear, role in President Donald Trump’s administration—would present a clear conflict of interest. Musk owns a <a href="https://www.theguardian.com/science/2024/dec/11/spacex-valued-at-350bn-as-company-agrees-to-buy-shares-from-employees">42% stake</a> in SpaceX, accounting for about $147 billion of his wealth.



“While I support efforts to modernize our air traffic control system and improve aviation safety, this decision raises conflicts-of-interest concerns, given Elon Musk’s dual position as Chief Executive Officer of SpaceX and wide-ranging role in the Trump administration,” Sen. Ed Markey of Massachussets wrote in <a href="https://www.markey.senate.gov/imo/media/doc/letter_to_faa_on_musk_and_starlink.pdf">a letter</a> published Wednesday to acting FAA Administrator Chris Rocheleau.



According to Jessica Tillipman, a professor of government contracts law and policy at the George Washington University law school, Musk’s ambiguous role in Trump’s administration and DOGE makes it difficult to assess if he’s part of the government and therefore subject to discussions around conflicts of interest. The White House has confirmed Musk is a <a href="https://fortune.com/2025/02/04/elon-musk-special-government-employee-130-days-avoid-public-disclosures/">special government employee</a>, but said in court filings he is <a href="https://fortune.com/2025/02/20/who-really-runs-doge-elon-musk-donald-trump-white-house/">not an employee</a> of the Department of Government Efficiency, the cost-cutting advisory he has championed and continues to be closely associated with.



If Musk’s role in the government were made clear, there are several ways in which he could present a conflict of interest. Foremost, he could present a criminal conflict, in which a government employee participating in a particular matter would stand to directly financially benefit from it. U.S. ethics rules separately address potential conflicts of interest if there is even an appearance of impropriety. There are clear systems in place on how a government employee would respond should there be a conflict, Tillipman said.



“Generally, employees would consult with an ethics official and recuse themselves from a matter and have some sort of transparency into this recusal,” she told Fortune.&nbsp;



The employee in question would also divest from the project in which they were financially involved or receive a waiver from the government. To waive a conflict, the government would need to establish in writing a clear reason why the involvement of the individual with a conflict would be serving public interest. This would happen before a contract is awarded.



Trump has previously said Musk “<a href="https://www.reuters.com/world/us/trump-appears-contradict-white-house-says-elon-musk-charge-doge-2025-02-20/">won&#8217;t be involved</a>” in any projects that would present a conflict of interest.



<h2 class="wp-block-heading">Lawsuits from the competition</h2>



How the government responds to Starlink’s involvement with the FAA is completely hypothetical, Tillipman said, so long as there’s not a clear understanding of Musk’s governmental role. But should there be a conflict of interest and the government chooses not to intervene, Musk can probably expect some lawsuits coming his way.



In many cases like this, “If the government doesn&#8217;t proactively address an actual overseas conflict, it will likely get challenged in litigation,” Tillipman said.



Competitors who were also vying for an FAA contract, for example, could argue that SpaceX, via Musk, had access to non-public information that would have given the company an unfair competitive advantage.



There’s a prominent example of a criminal conflict of interest in aviation. In 2002, then-Air Force acquisition chief <a href="https://www.washingtonpost.com/archive/business/2003/10/08/new-questions-raised-about-boeing-deal/f3dc7a27-576c-4b2b-b1aa-ca9b0c82e9a8/">Darleen Druyun</a> was negotiating for a job at <a href="https://fortune.com/company/boeing/" target="_blank">Boeing</a> at the same time it was trying to secure a $20 billion contract with the service. One month later, Druyun left the military to take the job at Boeing. She pleaded guilty to conflict-of-interest charges in 2004, admitting she favored the company for procurement contracts, and was sentenced to nine months in prison.



“Ultimately we have these rules in place because when people believe that public servants are acting more in their own interests than the interests of the general public, it undermines confidence in government,” Tillipman said. “It undermines trust, and ultimately, lack of trust and lack of confidence in government leads to instability.”</div>

The FAA is reportedly considering ending a $2.4 billion contract with Verizon to update its communication technology and instead award it to Elon Musk’s SpaceX.

Elon Musk's potential Starlink contract with the FAA: What's the advantage, and is there a conflict of interest?

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