Why Aviation Hasn’t Adopted Blockchain

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Covid-19 devastated the aviation industry. Airlines lost $168 billion dollars in 2020. Their revenues plummeted by 55 percent. In nominal terms, the subsector was set back 16 years to 2004.

Covid-19 preceded a big change in travel during the pandemic – airlines could not depend on the past for customer data to forecast the future. The future was unknown.

A once well-defined process was disrupted by the Covid-19 shut down. Travel ceased, and then additional steps were added to the passenger process.

New ways of streamlining the process were needed – whether that be contactless travel, tracking bags, identity, etc. – giving blockchain an opportunity to penetrate an industry dependent on outdated systems.

Early hurdles entailed simply surviving the pandemic, keeping down costs, safety and maintaining staff. Longer term challenges include modernizing legacy and core technologies with resilient architectures.

New technologies – blockchain, big data, cloud computing, predictive analytics, business intelligence, etc. – can modernize and cut costs for the aviation industry.

Smart companies turned crisis into opportunity, making innovative changes in order to emerge stronger than ever. For instance, there are a lot of bottlenecks today when it comes to cargo.

Therefore, some carriers adopted AI to determine cargo capacity available on passenger planes, which can depend on multiple factors such as weather, passenger loads, etc.

Airlines can use AI prediction at a far more granular level than traditional aviation tools.

During and after the Covid-19 disruption, airlines have explored contactless travel solutions, new types of blockchain loyalty programs and improving call center processes.

New aviation innovations go beyond digital technologies. New manufacturers are developing electric aircraft that can do vertical takeoffs and landings, which could revolutionize the way we travel.

And companies continue to research commercial flight at the speed of sound, while resource companies investigate sustainable aviation fuels.

How can blockchain revolutionize aviation

The aviation blockchain market is projected to grow from $421 million in 2019 to $1.394 million by 2025, at a CAGR (compound annual growth rate) of 22.1 percent.

Perhaps that is because there are many use cases for blockchain in aviation.

Identity

• Passenger
• Digital health passport
• Workforce

Provenance

• Baggage handling
• Leasing and MRO

Passenger reconciliation

• Multi-nodal tickets using barcode

Payment reconciliation

• Cargo
• Multi-nodal

Value exchange

• Loyalty
• Letter of credit
• Merchandise in-flight

Tracking and tracing

• Cargo using IoT
• Truck tracking

Ecosystem reconciliation

• Net zero
• Document handling
• Food and catering

Tokenization

• Loyalty

One of the more promising blockchain use cases involves provenance. Certain organizations have cropped up to promote the use of blockchain for tracking cargo on ships.

Beyond tracking cargo, blockchain can help to track and trace passenger baggage, spare parts and more – even frequent flyer miles can be tokenized.

Many of the changes happening in the airline industry will require modern settlement systems, providing blockchain and tokenization an opportunity to become increasingly important.

For instance, passengers might in the future enjoy a different cabin experience – instead of food and drink, they might be able to buy merchandise as well, which could be streamlined with a blockchain-based payment system.

Covid-19 was also a major catalyst for blockchain-based self-sovereign identity solutions, which can help manage identification.

During the pandemic, airlines were increasingly mandated to conduct new entry requirements by location and more.

Certain blockchain-based companies proposed digital health IDs, which give an airline an inroad into new processes to make the process efficient again.

A major idea behind sovereign identity is to put identity in the hands of the user so they have control over who has access to which information.

Hurdles remain

The legacy technology of the aviation industry dates as far back as the 1960s. A question for companies will be how to transition from an outdated stack to a modern one.

Hurdles like consumer education, regulation and bandwidth remain. Airlines, forwarders and shippers alike face strain moving people, products and more – let alone updating their ways of doing business.

Additionally, as technologists develop new standards, global regulatory frameworks could lag behind.

Nonetheless, companies and governments are becoming clearer about their views of blockchain, giving the aviation industry an opportunity to adopt a secure, fast, flexible, interoperable, trustless, confidential and user-friendly technology stack.

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Stuart Bullard is the chairman and CEO of Fly Air, Inc. and Fly Air International Ltd. Fly App combines voice-activated AI combined with blockchain technology, providing access to more than 10,000 private jets.

 

Featured Image: Shutterstock/stockphoto-graf/andrey_l

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