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In this day and age, the aviation industry is certainly one of
the fastest growing industries of the 21st Century. The
emergence of blockchain technology has given rise to a new hype of
technological innovation which certainly could add value to
numerous aspects within the aviation industry itself. The use of
blockchain in aviation could open up new opportunities in the
sphere of transparency namely with regards to maintenance, flight
data security and passenger information which will ultimately help
in increasing efficiency and accuracy levels.
What is Blockchain?
Before assessing the potential benefits of blockchain in
aviation one first needs to have a basic understanding of the
technology itself. Blockchain can be defined as a distributed
ledger that allows for information to be shared and recorded by a
community. The system is secured by cryptographic validation
techniques. One major characteristic of blockchain is that members
on the network have a fully transparent view of the information
found therein. To add more information on the blockchain there must
be consensus reached between all members on the network. The
recorded information can be any form of digital information such as
digital assets, contracts or transactions.1
What makes blockchain innovative is that all transactions can be
accessed by the entire network which allows members to see the
history of every transaction that has ever been recorded within the
network. Cryptographic algorithms validate the way transactions are
compressed into blocks and how blocks are added to the network via
consensus which also ensures integrity and immutability of the
network. As such, the blockchain allows for a trusted middle man to
be replaced by a mathematical algorithm whereby the trust in the
system stems from its cryptography.2
Potential use cases of Blockchain in
Aviation
As blockchain technology showcases great opportunities for
securing and managing data, the airline industry may shortly
consider implementing blockchain to its advantage. Below are a
number of ways in which blockchain may be made useful within the
aviation world.
Tracking of Baggage and Cargo
Blockchain allows for the reliable and immutable tracking of the
location and status of passengers bags and cargo as these assets
change custody from the moment of deposit. As such, blockchain can
aid in enhancing transparency and visibility which will allow
authorities and passengers to locate their luggage easily at all
times across the value chain.3
Identity Verification
The use of blockchain can enhance the efficiency of verifying
the identity of passengers. The details of passengers such as
biometric data, required documents and the tickets can be stored on
the blockchain network. Passengers could simply enter the airport
via a verification code, which will put an end to the hassle of
queuing for longs periods of time for document
verification.4
Ticket Overbooking
In the past ticket overbooking has been a problem for airlines
which could be mitigated through the use of blockchain. The use of
smart contracts would allow the automatized application of a smart
ticketing system which can be used by passengers to purchase
tickets.5 This method would make manual ticket issuance
superfluous, which will increase levels of efficiency and
accuracy.
Aircraft Maintenance
Throughout its lifecycle, aircrafts may change ownership up to
five or six times, which makes the tracking and tracing of
information a time-consuming and tedious process. For this reason,
an immutable record which lists the maintenance history of the
aircraft in a digital setting could be of great value for the
stakeholders involved.6
Automated Payments
Blockchain allows for the ability to create smart contracts
which are electronic agreements that execute by themselves upon a
set of pre-defined rules. The use of smart contracts can be adopted
in airline transactions such as the billing among airlines, the
billing between travel agencies and airlines, the sale of travel
insurance, the determination of loyalty settlements and the payment
of airport and authority fees and taxes.7
Loyalty Programs
Many airlines have frequent flyer programs (FFPs) that allow
airlines customers to accumulate points which can then be redeemed
for air travel. Member of loyalty programs that travel with a
partner airline may want to have their points or miles reconciled
at their customer account which can be a time-consuming and error
prone process. The use of blockchain can streamline, the earning,
spending, accounting and reconciliation of the points gained
through the use of smart contracts in order to minimize risk of
errors and improve customer satisfaction.8
Footnotes
1 L. Kehoe & J. Hallahan, Blockchain – A game
changer in aircraft leasing, Airfinance annual 2017/ 2018, p. 84.
Accessed at:
https://www2.deloitte.com/content/dam/Deloitte/ie/Documents/Tax/ie-blockchain-a-game-changer-in-aircraft-leasing.pdf
2 Idem.
3
https://www.bbntimes.com/en/technology/blockchain-in-the-aviation-industry
4 Idem.
5 Idem.
6 Kehoe & Hallahan (n 1), p. 85.
7
https://www.bcg.com/publications/2019/what-could-blockchain-do-airlines.aspx
8 Idem.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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