We at Travel in Motion have already published numerous blogs, white papers, and podcasts about, hopefully, relevant subjects in our industry. But until now we have only once discussed blockchain and this was quite some time, ago. Are we missing out on something? Or are we “clever” enough to know that blockchain is simply a buzzword and will disappear like many others that were once hype and are now out of sight, out of mind? I think it is a case of “neither one nor the other”. As many others, we have mixed feelings about the relevance of blockchain technology in commercial airline IT. Thus, we are simply not yet confident enough to take a definitive position.
Maybe it would be helpful to summarize what blockchain technology really is and where it makes (or could make) the difference in comparison to “traditional” systems, such as databases. For me a good, but non-scientific start to get a high-level understanding of a new topic has often been Wikipedia, which describes blockchain as:
“a distributed ledger with growing lists of records (blocks) that are securely linked together via cryptographic hashes. Each block contains a cryptographic hash of the previous block, a timestamp, and transaction data (…). The timestamp proves that the transaction data existed when the block was created. Since each block contains information about the previous block, they effectively form a chain (…), with each additional block linking to the ones before it. Consequently, blockchain transactions are irreversible in that, once they are recorded, the data in any given block cannot be altered retroactively without altering all subsequent blocks.”
Comparing blockchain technology with traditional database technology shows that it delivers advantages. IBM provides an informative and easy-to-read summary on their website, which I have used for this blog:
- Enhanced security: as the records are distributed over numerous entities with an end-to-end encryption, fraud-like manipulation of data and other unauthorized activities are simply not possible.
- Greater transparency: as a blockchain uses a distributed ledger, all data and transactions are recorded identically in multiple locations. Thus, all participants see the same information at the same time, leading to transparency.
- Instant traceability: through blockchain the provenance of data is documented and can be audited.
- Increased efficiency and speed: compared to traditional paper-heavy and manual processes blockchain technology can lead to faster and more efficient execution.
- Automation: through “smart contracts”, transactions are automated when pre-defined conditions are met. Smart contracts are programs stored on a blockchain that run when predetermined conditions are met.
As I am not a computer scientist, I am still not 100% sure if I understood all the above, but it has at least given me a view of where blockchain technology may provide advantages over traditional database technology. In a traditional database setup, data is stored in tables and can be modified any time. Blockchain is more secure, more or less immune to fraud, transparent and does not require a centralized third party to secure the system. Through this, blockchain as a technology creates confidentiality and trust without being managed centrally.
The probably best-known use of blockchain technology is cryptocurrencies. I must admit that the volatility of values, stored in and managed through cryptocurrencies does not impress me – it even makes me suspicious. But cryptocurrency is just an application that uses blockchain technology and it is probably the best proof point that the underlying blockchain technology really works.
So, what does this mean for commercial airline IT systems? Our ecosystem can also be characterized as an environment where participants are globally distributed, representing different interests with a need to cooperate, and where values are shifted through digitalized channels, requiring the highest security and traceability. Doesn’t this ring a bell? Aren’t these the characteristics that also describe the advantages of blockchain technology? Blockchain is exactly a technology that meets the requirements described above. The issue is only that these requirements already existed long before blockchain became available – and not only that, also these requirements have already been solved long before blockchain appeared on our radar screens. So, is blockchain a wonderful technology that addresses issues which have already been solved in our industry? I think there is an element of truth in this. Replacing legacy technology and processes for the sake of using modern technologies has always been a big challenge and an issue in our industry. Or in other words, while blockchain promises a lot and has also proven to deliver what it promises from a technological standpoint, what are the potential areas of use in our industry? What are the killer use cases for blockchain technology in commercial airline IT? In settlement process? Or distribution perhaps? Or perhaps even a combination of NDC; offer and order management together with blockchain – doesn’t this sound more like a nightmare to some of us?
But as of today, most of us still feel that blockchain is a technology that is rising and becoming more mainstream, but we do not yet know how it will be utilized and what impact it will have. Therefore, I come back to the point mentioned earlier in this blog. We at Travel in Motion are not yet confident enough to take a definitive position. This time we need your help: how do you see blockchain in commercial airline IT? Where do you see a value add? Where do you see use cases? We are looking forward to receiving your thoughts!
(Boris Padovan, 6. February 2023)