Kicking off enterprise blockchain solutions in the airline industry

New enterprise blockchain solutions are launched to improve the efficiency of the aviation industry, promising a powerful transformation.

Airline transport is convenient for international trips and long-distance travels. The digitalization of the aviation industry is bringing powerful transformations to this high-value transportation industry.

Accordingly, as more and more people choose to travel by plane, there is a need for more powerful and efficient data system management solutions. Blockchain technology is showing the positive results in the aviation industry, with an impressive number of 22.1% CAGR - up from $421 million to $1,394 million from 2019 to 2025. New enterprise blockchain solutions are launched to improve the efficiency of this ecosystem.

Kicking off enterprise blockchain solutions in the airline industry

The issue of data management and data security of the aviation industry

The aviation industry requires a vast investment cost with many modern technologies involved, so operating the system behind the flights is challenging. This process consists of the coordination of transactions between airlines, flight operations, ground services, aircraft maintenance schedules, sales strategies and customer service programs.

Besides, high fixed costs and complex ecosystems make it very difficult for a disruptive change in aviation system management to occur.

The aviation industry ecosystem includes customers (individuals, companies and commodities), airports, airline partners, distributing agents, Global Distribution Systems (GDS), industry associations such as IATA, government agencies, service providers and travel agencies (such as hotels, taxi companies, car rentals), logistics companies.

With the participation of many such parties, the information flow in the airline systems needs to be extremely agile to handle changes in plans and possible incidents promptly.

Despite improvements, however, storing data on separate systems of each company results in stagnant data silos. Also, personal data of customers can be used to sell to other service providers, typically with taxi companies without customer consent. Moreover, the lack of critical data security systems has caused personal data leakages for many years.

Take Hong Kong's Cathay Pacific airline as an example. The firm was fined £500,000 (nearly $650,000) for its lack of active data security measures. According to the results of an ICO research, from October 2014 to May 2018, personal information of more than 9.4 million passengers of this airline such as name, passport number, identification details, date of birth, address, email, phone number as well as travel history was exposed. The company then has started to invest and develop many security solutions to troubleshoot problems and regain customer trust.

Blockchain is one of the security solutions that the company has chosen. The company began testing this technology with a loyalty solution, combined with food and beverage promotion services, to achieve transparency and observance of performance with partners. This loyalty program is one of the many enterprise blockchain solutions that is useful to the aviation industry.

Enterprise blockchain solutions for the aerospace sector

Blockchain can solve many different problems in the industry. However, based on visibility and application needs, airlines can start with some available solutions that make sense for the industry, namely:

Financial solutions:

Financial solutions include automated handling of repetitive processes, payments and minimization of intermediaries in the distribution system:

Manual procedures cause time-consuming processing as well as many human errors. Meanwhile, minimizing cumbersome processes is essential in ensuring punctuality, precise information, and saving the cost of handling consequences.

Smart contracts on blockchain allow automatic execution of jobs that require manual manipulation. Specifically, the airline industry handles billions of overlapping transactions between airlines themselves and accompanying service providers such as cleaning, catering, airport services, and payment of taxes/fees, etc.

All participants providing services around flights will access a single information system. Passenger, flight, and departments/staff information involved in the implementation will be uploaded to this system.

Identity management and improving customer experience solutions:

As airline travel became a prefer, more airline firms emerged. Loyalty program with bonus points is one of the strategies that many airlines choose to increase their competitiveness.

Companies use loyalty programs to reward their best customers. However, 63% of consumers find reward programs too tricky to use and having too many separate member cards makes them annoyed.

Customers may not be able to use their points before expiration day because they have not reached the required points. Fragmentation of loyalty programs of firms has reduced the ability of customers to use bonus points, affecting the overall effectiveness of their marketing strategy.

Besides, 63% of Americans say it is essential for them to know that a brand won't share their personal information needed to redeem an exclusive offer. Transparency and security are of utmost importance to them.

Blockchain-based loyalty program solutions can help improve the visibility, transparency, and security of customer information. Blockchain can connect multiple loyalty program systems of numerous disciplines into a single system based on specific conversion ratios.

In this way, bonus miles from airline companies can be exchanged for other services such as dining, beauty, entertainment for daily needs. Information about customers' behaviours and trends in consumption also has great potential value. Customers can also focus on tracking their bonus points gathered at a single point. The process of buying/selling tickets - getting bonus points - redeeming points will be seamless and straightforward.

Also, blockchain-based digital ID management solutions promise to help customers capture their identity sovereignty. Specifically, consumers will now be able to manage their information; only they have the right to decide how to use and share their data. Airlines also control customer identities easier, obligate in the process of portraying and classifying customers, and avoid the risks associated with identity forgery.

Air cargo tracking solutions:

Tracking information and shipment status pose a challenge for air freight companies to handle a vast amount of related documents. The blockchain's ability to digitalize and store information transparently makes transport monitoring easier by eliminating the majority of cumbersome paper verification procedures. Costs of transport have also significantly reduced.

This method also helps prevent smuggling using air transport because of the ability to track and trace with reliable information of the blockchain.

Maintenance, Repair and Overhaul (MRO) information storage solution:

It is imperative to check, track and record the movement and maintenance history of aircraft parts. Most of the aircraft components are manufactured, supplied and performed MRO by a variety of parties. Currently, information related to the production, transportation and maintenance process is only partially digitized and stored separately on many systems, leading to vulnerability and inadequacy.

Digitalizing information with blockchain allows alliances to store data about MRO securely and securely. Based on detailed and accurate information, the data collation process will also implement automatically with higher effectiveness. According to PwC, the aviation industry's revenue could increase by up to 4% (or $40 billion), while the global MRO cost will drop by about 5% (or $3.5 billion) with blockchain.

In 2019, the world witnessed the launch of the coalition of leading engine manufacturers, logistics providers, maintenance providers, and airlines including Bolloré Logistics, Cathay Pacific, FLYdocs, HAECO Group, Ramco. Systems, SITA and Willis Lease Finance Corporation. This event marks a milestone in implementing blockchain to achieve effective information sharing and tracking in the aviation industry.

The future potential of aviation blockchain

The aviation sector has significant advantages for implementing enterprise blockchain solutions. With many high technologies, the aviation industry already has the high-tech infrastructure and human resources, helping to accelerate the process of integrating new technologies.

With limited capacity per airline, partnering with other airlines is the ideal way to exploit the flight sector. For long-standing alliances such as SkyTeam, Oneworld, Star Alliance, blockchain will be an effective method to exchange and utilize practical information value of airlines without infringement.

The digital ID, loyalty programs, and commodity tracking projects that akaChain's partners are using show many positive signs in information system administration and data sharing. In particular, effective loyalty programs are one of the factors that help their businesses do well and thrive after difficult times (such as the COVID-19 pandemic).

Because of the COVID-19 epidemic, many airlines have had to stop flying or even close. However, this is also the time for the surviving airlines to review their resource management systems, and consider the application of new technologies to reduce the cost burden and operational effort.

About akaChain

akaChain is backed by FPT Software, a globally leading technology, and IT services provider. It is an end-to-end, permissioned, multi-chain network based on the Hyperledger Fabric. Since Establishment in September 2018, akaChain’s product has assisted many enterprises, from SMEs to Fortune 500 firms, to transform with distributed ledger technology. The company provides a broad range of permissioned blockchain-based products and services in multiple sectors, including retail, supply chain, banking and finance, insurance, shopping mall management, etc. to transform with its distributed ledger technology. For more information, please visit https://blog.akachain.io/.

Contact us for more information: 

Website: https://akachain.io
Phone: +84 90 1133883
Email: admin@akachain.io
Addresses: FLC Twin Towers, 265 Cau Giay street, Dich Vong Hau ward, Cau Giay district, Hanoi, Vietnam.

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