Investment in blockchain is increasing across business sectors, thanks to compelling use cases and cautious optimism about the technology’s traction. Airlines, too, are exploring practical blockchain applications to reinvent everything from loyalty programs to the supply chain.
The buzz around blockchain has continued unabated since proponents began touting the emerging distributed ledger technology over a decade ago. What has changed, however, is blockchain’s evolution from an undeveloped, unproven solution to a more refined and mature opportunity that can deliver true digital transformation. According to Deloitte’s 2019 Blockchain Survey, 40% of respondents say they are willing to spend $5 million or more on new blockchain initiatives over the next 12 months. At the same time, 53% say blockchain technology has become a critical priority for their organizations in 2019—a 10-point increase over last year.
The airline industry is increasingly exploring the potential of blockchain to reinvent its core operations and ecosystems, including loyalty programs, parts tracking, and other parts of the supply chain. A recent Deloitte Dbriefs webcast on the topic examined how airlines can use blockchain, with an in-depth look at practical industry applications and key steps airlines can take to evaluate potential opportunities.
Several digital tools are already disrupting the airline industry, each with significant potential to boost business efficiencies. These include applying machine-learning-based cognitive computing, scaling services and reducing costs through cloud computing, and introducing advanced analytics capabilities that foster nimble decision-making.
Airlines are now poised to add blockchain to this transformation mix. They can implement blockchain platforms in concert with other digital technologies to create more efficient, agile processes. Simply defined, blockchain is a distributed ledger that provides a way for a community to record, share, and maintain information. Trusted participants with permission all have access to the same data, while changes cannot be made to what is already written to the ledger. That means blockchain offers a single source of truth among participants at all times.
Airlines will likely not use blockchain as a replacement for existing technical architecture but as a technology overlay that connects trading partners in various systems, such as ERP, order management, or billing. Airlines can use blockchain to improve processes between partners in several areas. These include record keeping, as records on a blockchain are secure, immutable, and accessible only to trusted participants; value transfer, with transactions occurring automatically in near real-time with no intermediaries or reconciliations necessary; and smart contracts, which offer programmable conditions that trigger transfer of value and information and allow changes only if the business and its trading partner agree.
The airline industry has many characteristics that align with the value and capabilities of blockchain. For example, airlines have a high level of data sharing across networks and among multiple parties. Assets tend to move across many hands and touchpoints, with transaction dependency along the way.
When airlines evaluate potential applications for exploration, piloting, or production, they can keep in mind that blockchain need not solve every problem, but it should solve at least a handful of important issues. If not, they can consider whether blockchain is the right tool for the challenge.
Two of the most important and exciting airline-focused blockchain applications are:
Aircraft-parts tracking. Aerospace parts are highly valuable, heavily regulated, and long lasting. They also move around the world and are touched by many hands. Therefore, it is critical for airlines to be able to prove parts are genuine—made by certain approved manufacturers from the right materials.
