The term “aviation” is relatively broad, being used in reference to everything from taking a personal Cessna 150 up for a leisurely afternoon joy flight to high-risk missions in the most advanced modern military aircrafts, and everything in between. When it comes to issues perpetually plaguing aviation, there’s plenty of overlap. For example, the industry’s shortage of aircraft mechanics due to the disproportionately aging baby boomer generation will cause a supply deficit of 9% by 2027, with that deficit beginning in 2022.
This mechanic shortage is an industry-wide issue, as are the complications that have come with growth in both commercial and defense aviation, thanks to low fuel costs and relative economic prosperity. But an annual 1% growth in commercial aviation along with a 2.4% growth in aerospace and defense aviation will lead to more wear and tear on aircrafts, putting even more stress on supply chain managers, a dwindling mechanic pool, and employees tasked with handling logistics and customer relations.
Supply chain integration and oversight, as well as real-time parts and aircraft monitoring services, are two of the most touted use cases for blockchain technology in the aviation sector. Time will tell whether blockchain can resolve these issues, but there’s little doubt that it can assist in some capacity.
Whether you own one plane or an entire airline, aircraft maintenance is neither cheap nor easy. The average hangar cost is $275 per month, plus an additional $100 for tie downs. Annual inspections can cost as much as $1,200 for small aircraft, and far more for commercial airliners (which must be inspected far more frequently). Then there are factors such as gas and oil, part depreciation, and insurance to consider. Airliners have much steeper costs associated with them, an average of $1,430 in maintenance per flight hour. Supply chain costs related to aircraft maintenance accounted for 80% of direct maintenance spending in 2009, and is likely higher now.
We’ve all experienced the dreaded “creeping delay” at the airport. It seems to get longer and longer due to some unspecified maintenance issue. These delays cost countless amounts of money and are responsible for much of airline travel’s poor reputation. Between June 2015 and June 2016, more than 1 million flights were delayed, with those delays chewing up approximately 64 million minutes worth of their passengers’ time. About 50% of those delays are due to controllable factors, like aircraft maintenance.
Several industry leaders are in the works developing systems by which maintenance issues can be more easily foreseen and dealt with using blockchain distributed ledger technology. Tracing individual parts to gauge their fitness for flight and anticipate declines in their quality is one use of the technology, as is providing a more connected record for maintenance-related departments to rely upon. These uses could cut down on the one thing that gives airlines and passengers the most consistent trouble: delays.
Companies Trying to Solve This Problem
- Accenture – Prototype for aviation manufacturing and parts provenance.
- Aeron – Better data traceability and management for aviation firms.
- Lufthansa – Launched blockchain innovation challenge to tackle transparency issues.
Streamlining Digital Travel Systems
The United States has the world’s largest travel industry, valued at $488 billion. With the amount of traffic moving through American airports, hotels, and car services at any given moment, it should be no wonder that traveling any significant distance is often seen as a chore. Globally, tourism was responsible for $7.6 trillion dollars in 2016, making it one of the most economically impactful sectors there is. The accommodation, transportation, entertainment, and attraction sectors, are indirect beneficiaries of tourism: they generated approximately $2.3 trillion in 2016.
Companies that organize travel bookings may incur as much as $269,000 in fragmentation costs that arise when customers insist on using different services to save a nickel here and there. Inefficiency is a major cost to the travel industry as a whole. As airlines roll out more features, like upgraded business-class cabins, options for sliding-door suites, and beyond, the cost of fragmentation in operations will likely continue to rise. A technology that can unify systems not only for airlines, but for the many industries that travel agents must consider when booking an entire trip, will help ease the cost.
Ticketing, loyalty programs, customs, and non-airline logistical industries such as transportation and hotels could all use some streamlining, and some see the blockchain as the ideal technology for trimming the fat.
Companies Trying to Solve This Problem
- Winding Tree & Air New Zealand – Partnering for faster transaction settlement and fee reduction.
Flight Records Systems Security
When Malaysian Airlines Flight 370 disappeared in March 2014, it immediately became one of the greatest mysteries in aviation history. With 239 people on board, a bizarre change in the flight pattern, and still no indication of where the wreckage may actually be, countless friends and family members still don’t know what happened. Even though one of the men on board was an IBM executive, and another was an actor cast in Netflix’s Marco Polo, the lack of solid information surrounding the flight continues to astound.
In the wake of the disappearance, Malaysia’s official response was slammed as “inaccurate, or at least incomplete” by a Chinese media organization, and it’s difficult to argue with the assessment. The lack of details about where the flight was headed and where it may be is a prime example that better oversight systems for such critical information is still needed.
Data pertaining to a given flight — manifests, baggage onboarding, flight path, and the like — carry varying degrees of importance. Some information may save serious time and effort, like a tracking down a lost bag more efficiently. Other information — like who was on a flight, where they sat, and where the flight was headed — could be the key to solving mysteries in the unfortunate event that a flight doesn’t reach its destination. Regardless of a piece of information’s use or relative importance, securing all flight-related intel remotely on a blockchain backup record would be an added measure of security to the centralized systems of today.
Companies Trying to Solve This Problem
- SITA, British Airways, Heathrow Airport – Partnered to create a blockchain-secured data sharing model.
Reducing Instances of Overbooking
When Dr. David Dao was forcibly removed from his seat and dragged off of a United Airlines flight in April 2017, it was easy to blame the three Chicago police officers who did it as the primary culprits. The video was horrific, and the three officers eventually lost their jobs later that year. But was it really their fault, or were they simply doing their jobs? After all, it was United Airlines that overbooked the flight, not the police officers. Overbooking is a shameless industry-wide tactic, it just so happens that these officers were involved in a particularly ugly incident of overbooking enforcement.
Though Southwest Airlines is known for their customer service, it’s actually the worst statistical overbooker of the lot, showing just how widespread the problem is. JetBlue isn’t far behind on the list. Firsthand accounts of overbooking victimhood run the gamut, from being forced off with absolutely no incentives to losing out on prepaid ski passes. One passenger found out that his frequent flier status meant he was not only immune from being overbooked, but that he could practically kick off any pre-booked passenger at his behest.
Smart contracts and tokenized tickets may help ensure that a truly fixed number of tickets are issued. Airlines will often sell an excess number of tickets, banking on late cancellations, passengers missing their flights, or any other number of possibilities that could result in a plane flying at less than capacity. An empty seat is lost revenue for the airline, but when everybody shows up, someone’s plans have to change. Currently, airlines can feign ignorance as to why or how the flight was overbooked, but with tokenized ticket-issuance systems, more advanced features like flight-delay insurance and ticket bidding can help ensure that all parties make out economically without the need to overbook a flight.
Companies Trying to Solve This Problem
- Volantio – Helping airlines protect passengers from overbooking challenges.
- Fizzy – Decentralized “smart travel insurance contracts” to protect passengers when airlines don’t.
Airline Alliance Revenue Sharing
The first airline alliance was established over 21 years ago, and while the nature of revenue sharing between partnered airlines has evolved over the years, it remains an integral part of the commercial aviation sector. Today, there are three major airline alliances: Star Alliance, SkyTeam, and Oneworld.
Star Alliance was founded by member airlines United, Scandinavian, Thai, Lufthansa, and Air Canada, and has expanded to a roster of 27 airlines, covering 18,800 daily flights to 1,300 destinations across 193 countries. SkyTeam is the newest of the alliances, founded in 2000 by Delta, Aeromexico, Air France, and Korea Air, totaling 20 members with a reach not far off of Star’s. Last but not least, Oneworld, founded by American Airlines, British Airways, Qantas, Cathay Pacific, and Canadian Airlines, teamed up in 1999 to provide a more intelligent revenue-sharing model and greater array of connection options for passengers of its airlines. These alliances have necessitated revenue-sharing algorithms, but they remain flawed. They lack measures to prevent inter-airline squabbles and time delays that defeat the purpose of cooperation among member airlines.
Cooperation among airlines can make sense economically, especially in terms of the less quantifiable PR aspect. When a flight is cancelled or international connections run thin, the ability to tap into partner airlines to accommodate passengers is invaluable, both in terms of preserving revenue for the airline and ensuring that passengers don’t miss critical plans or meetings. That said, revenue sharing systems remain complex and fragmented. The ability to rely upon a unified system that could use algorithms to immediately settle predetermined revenue shares among cooperating airlines would reduce costs, improve timeliness, and result in more customers reaching their destinations in a reasonably timely manner.
Streamlined Frequent Flyer Programs
Ever since American Airlines became the first to introduce a flyer loyalty program in 1981, brand loyalty and rewards have become synonymous with commercial air travel. In fact, the term “frequent flyer miles” has become something of a cultural substitute for loyalty rewards in general, but the airline industry’s success at creating an effective incentive-laden framework for their customers varies greatly. According to Forbes, 2018’s best frequent flyer programs are: 1) JetBlue Airways TrueBlue 2) Southwest Airlines Rapid Rewards, and 3) Alaska Airlines Mileage Plan. These rankings, which are based on a J.D. Power 1,000-point scale, are increasing year-over-year, but many airlines are still lost in the shuffle. Even those who rank highest could stand to improve.
One way that airlines could take better advantage of customer loyalty is to merge alliance member airlines to provide a more appealing frequent flyer package. This would foster a greater likelihood that passengers would actually redeem their accrued miles, therefore being incentivized to earn them in the first place. With a wider array of airlines to choose from, frequent flyer programs could become more appealing than they already are, and the blockchain could serve as a platform to seamlessly integrate revenue sharing, point allotment, and automated point redemption in a cost-effective manner.
Companies Trying to Solve This Problem
- Singapore Airlines – Tokenizing frequent flyer programs.
- Loyyal – Smart contract based loyalty solutions.
Multi-Tier Oversight in Private and Commercial Flights
Fortunately, flight, and commercial aviation especially, has become a safe proposition. You may have heard the off-the-cuff comparisons (“you’re more likely to choke on a blade of grass than die in a plane crash”), and most of the time they ring true. According to many metrics, 2017 was the safest year in the history of commercial air travel. When hijackings, suicide, and sabotage are accounted for, 59 people died worldwide as a result of commercial aircraft accidents or malfunctions, which is a modest number considering the sheer volume of daily flights spanning the world. The 14 accidents that resulted in those deaths compared favorably with 2016, when 17 accidents claimed the lives of 258 individuals.
However, these statistics, though low, cannot be assessed lightly — each life is a life, after all. No story brings that fact to life quite like the case of the Brazilian Chapecoense soccer team, who were on their way to an unlikely championship match when their plane crashed into a mountainside in Medellin, Colombia, killing 71 of the 77 passengers. The pilot had chosen not to refuel in an effort to save money — precisely the sort of decision that should be taken out of the hands of humans with an inordinate financial stake in such choices.
One of blockchain technology’s primary benefits is the ability for several parties to access the ledger, regardless of their location. This decentralized facet could set in place a system of checks and balances that would regulate pilots and owners of private airlines, who may otherwise be tempted to cut corners in order to save money. Whether this involves regulatory agencies, specific airports, or organizations will be determined on a case-by-case basis, but if blockchain can help prevent another Chapecoense, it is a cause well worth pursuing.
Southwest Airlines is generally well regarded in terms of customer service, accountability, and competence, at least as far as airlines go. But even when you think you’re “Free to Move About the Country,” you might not be, as the airline and its passengers found out in July 2016. At least, not if you hadn’t printed out your paper ticket before leaving your house for the airport. When Southwest’s centralized — key word here — ticketing database failed, or more accurately melted down, more than 2,000 flights had to be canceled.
Ultimately, it would cost Southwest a serious PR hit, countless hours (days, probably) spent responding and apologizing to angry Twitter mobs, and $82 million in lost revenue. These sort of ticketing snafus are not uncommon. Whether your smartphone stops working with only minutes to make a flight or other circumstances prevent you from making it to your destination, the legacy ticketing systems could stand for some improvement.
The implementation of tokenization for ticketing can be chalked up to one still-theoretical concept: the smart ticket. By utilizing smart contracts and blockchain technology for airline tickets, not only will the need for paper tickets be eliminated, these tickets could be built-in with several stipulations and terms, including access to an airport lounge, whether the seat is business or first class, additional accommodations, and more. Additionally, storage of tickets on a blockchain could help mitigate or eliminate the effects of the chaos that accompanies the crash of an airline’s or entire airport’s centralized ticketing database. Such a ticket may also evolve systems for booking by eventually eliminating the need for alternate forms of identification.