Why Aviation Hasn’t Adopted Blockchain

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Covid-19 devastated the airline industry. Airlines lost $168 billion in 2020. Their revenue fell by 55 percent. In nominal terms, the sub-sector was set back 16 years to 2004.

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

A once well-defined process was disrupted by the Covid-19 shutdown. The journey ceased, and then more steps were added to the passenger process.

There was a need for new ways to make the process more efficient – whether it’s contactless travel, tracking bags, identity, etc. – gives blockchain an opportunity to penetrate an industry dependent on outdated systems.

Early obstacles simply involved surviving the pandemic, keeping costs down, security and maintaining staff. Long-term challenges include modernizing legacy and core technologies with resilient architectures.

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

Smart companies turned crises into opportunities, and made innovative changes to stand stronger than ever. For example, there are many bottlenecks today when it comes to cargo.

Therefore, some airlines adopted AI to determine the cargo capacity available on passenger aircraft, which may depend on several factors such as weather, passenger load, 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 improved call center processes.

New aviation innovations go beyond digital technologies. New manufacturers are developing electric planes that can perform 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 jet fuel.

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

Identity

• Passenger
• Digital health passport
• Work force

Provenance

• Baggage handling
• Leasing and MRO

Passenger reconciliation

• Multi-nodal tickets with barcode

Payment reconciliation

Exchange of value

• Loyalty
• Letter of credit
• Goods on the plane

Tracking and tracing

• Cargo using IoT
• Truck tracking

Ecosystem reconciliation

• Net zero
• Document management
• Food and serving

Tokenization

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

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

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

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

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

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

Some blockchain-based companies proposed digital health IDs, which give an airline an intervention in new processes to make the process efficient again.

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

Obstacles remain

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

Obstacles such as consumer education, regulation and bandwidth remain. Airlines, freight forwarders and shippers experience loads that move people, products and more – let alone update their ways of doing business.

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

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

Stuart Bullard is 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