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
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
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.
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
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
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
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
6 Kehoe & Hallahan (n 1), p. 85.
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