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Today, the aviation industry is arguably 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 that could certainly add value to many aspects of the aviation industry itself. The use of blockchain in aviation could open up new opportunities in the area of transparency, especially with regard to maintenance, flight data security and passenger information, which will ultimately help increase levels. efficiency and precision.
What is blockchain?
Before evaluating the potential benefits of blockchain in aviation, one must first have a basic understanding of the technology itself. Blockchain can be defined as a distributed ledger that allows information to be shared and recorded by a community. The system is secured by cryptographic validation techniques. A major feature of the blockchain is that the members of the network have a completely transparent view of the information that is found there. To add more information on the blockchain, consensus must be reached among all members of 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 are accessible 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 how transactions are compressed into blocks and how blocks are added to the network through consensus, which also ensures the integrity and immutability of the network. As such, the blockchain allows a trusted intermediary to be replaced by a mathematical algorithm in which trust in the system stems from its cryptography.2
Potential use cases for blockchain in aviation
As blockchain technology presents great opportunities for securing and managing data, the airline industry may soon consider implementing blockchain to its advantage. Below are a number of ways blockchain can be made useful in the world of aviation.
Baggage and freight tracking
The blockchain enables reliable and immutable tracking of the location and status of passenger baggage and cargo, as these assets change custody from the moment of deposit. As such, blockchain can help improve transparency and visibility, which will allow authorities and passengers to easily locate their baggage at any point along the value chain.3
The use of blockchain can improve the efficiency of passenger identity verification. Passenger details such as biometrics, required documents and tickets can be stored on the blockchain network. Passengers could simply enter the airport via a verification code, which will end the hassle of waiting in line for long periods of time for document verification.4
Overbooking of tickets
In the past, overbooking of tickets has been a problem for airlines that could be mitigated through the use of blockchain. The use of smart contracts would allow the automated application of a smart ticketing system that can be used by passengers to purchase tickets.5 This method would make manual ticket issuance superfluous, increasing levels of efficiency and accuracy.
Throughout its life cycle, airplanes can change owners up to five or six times, making tracking and tracing information a long and tedious process. For this reason, an immutable record that lists the aircraft maintenance history in a digital frame could be of great value to relevant stakeholders.6
Blockchain makes it possible to create smart contracts which are electronic agreements that execute on their own according to a set of predefined rules. The use of smart contracts can be adopted in airline transactions such as invoicing between airlines, invoicing between travel agencies and airlines, selling travel insurance, determining loyalty settlements and payment. airport and authority fees and taxes.7
Many airlines have Loyalty Programs (FFPs) that allow airline customers to accumulate points which can then be redeemed for air travel. Members of loyalty programs who travel with a partner airline may wish to have their points or miles reconciled to their customer account, which can be a lengthy and error-prone process. The use of blockchain can streamline, earnings, expenses, accounting, and reconciliation of points earned through the use of smart contracts to minimize the risk of errors and improve customer satisfaction.8
1 L. Kehoe & J. Hallahan, Blockchain – A game changer in Aircraft Leasing, Annual Airfinance 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 and Hallahan (n 1), p. 85.
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