The buzz around blockchain technology was inescapable in 2018. This year, the hype has evolved as startups begin to test blockchain-based products for travel and continue pursuing visions of redefining the industry. The caveat: travel has thin margins, especially in aviation. We need things that actually work.
With this in mind, JetBlue Technology Ventures (JTV) recently hosted the inaugural Blockchain In Travel Summit in New York City. As the corporate venture capital arm of JetBlue Airways, blockchain-based solutions hold tremendous appeal. The technology could potentially improve several aspects of airline operations and result in more seamless travel.
On March 20, JTV gathered 31 speakers and nearly 200 stakeholders from across aviation, hospitality, and government, as well as startups, investors, and travel professionals. Bonny Simi, president of JTV (and a JetBlue pilot!), took the stage first to set the tone around blockchain as a community-driven, collaborative technology.
Our kickoff keynote featured KLM’s blockchain lead Linda Bos, who shared best practices on socializing blockchain initiatives in corporate settings. The rest of the day explored real-world airline case studies from startups like Loyyal, Cirravia, and Blockskye, as well as panels highlighting industry standards, investor insights, and blockchain for hospitality distribution. (You can view the full agenda here.)
In a three-part series, we’ll distill some of the most pertinent takeaways and themes from the event. Our goal was to broaden and deepen understanding around this much talked-about topic in tech and apply it to travel. Here’s what we learned.
Blockchain = distributed ledger technology
The noise around blockchain has led many to correlate blockchain with bitcoin, a digital currency, and a store of value. Bitcoin is just one use case for the underlying distributed ledger technology (DLT).
Think of it like this: physical currency consists of paper, which is a use case for trees. There are lots of things that we can use trees for, but trees are not currency! Another way: Google is an application of the internet, but not the internet itself. Similarly, bitcoin uses DLT — but you don’t need bitcoin to use distributed ledgers.
There are two types of blockchains (or ledgers): private and public. A private ledger is available to invited parties and a public lecture is publicly accessible. Each has its own advantages: public offers transparency and private can be beneficial for privacy and control.
Often used interchangeably, blockchain and distributed ledger technology refer to the underlying architecture. A distributed ledger is a shared record that exists in more than one place at the same time. It cannot be changed without each instance being in agreement; it is thus seen as a “single source of truth.”
Applying distributed ledgers in the travel industry
The summit’s wide-ranging conversations highlighted how the travel industry can benefit from blockchain technology. To better understand how the technology could affect the future of travel, here are some areas with the most promising potential.
Trust and safety. This is one of the most compelling use cases for distributed ledger technology. Immutability means that ledgers can’t be altered. This ensures safer operations, such as tracking mandated crew rest breaks or maintenance logs. And, since these records aren’t on paper, there are fewer chances for inaccuracy or fudging. With a distributed ledger, the many logs in and around airplanes can be shared among ecosystem partners more easily and securely. It comes down to how DLT’s transparency encodes trust into its own architecture, said ConsenysLabs Partner Shawn Cheng:
“Don’t trust, verify. That’s what transparency is supposed to bring. I don’t need to say, “is this real.” I don’t have to guess.”
Loyalty. Managing loyalty is an expensive proposition. There’s reconciliation to consider, as loyalty programs must track points earned and redeemed, as well as expiration dates. A shared ledger can be reconciled as needed without manual intervention, reducing cost and accounting time. The value of a loyalty program isn’t only to entice repeat business — it’s also to better personalize offers. Greg Simon, CEO of blockchain loyalty startup Loyyal, highlighted the ease of integration, which allows the network to have more redemption partners and greater appeal to consumers:
“Earnings can be shared seamlessly across multiple partners…so profitability per partner rises when it’s easier to onboard and integrate new ones without fuss. It also makes redemption easier and more fun for users.”
Distribution. The global distribution systems were built on mainframe technology in the 1960s. While the technology slowly migrates to more efficient cloud computing, much remains as it was back then. These “legacy systems” slow down searches, create bottlenecks, and reduce modern merchandising opportunities. These limitations mean less personalization when striving to serve the right offer at the best time in the ideal channel. Cirravia presented its visions for “unblocking key travel ecosystem with a zero cost mindset.” CEO Kolbeinn Arinbjarnarson explained how the technology powers dynamic personalized pricing and tailored products:
“The distributed ledger drives down the cost settlement, distribution, and storage. It changes the way we do the plumbing, moving from price-based to attribute-based discovery and search.”
Data fluidity. The dream of fully seamless travel, long held by both the industry and travelers, requires data fluidity. To achieve that dream, we need a single asset group that can move securely across borders. There’s a shared obligation to both protect the privacy of travelers and fulfill local legal and regulatory obligations. Data governance must be baked into the structure from the get-go. It can’t be an afterthought. This is especially vital with blockchain technology, as data is a fundamental, structural part of any project. The primary hurdle is how to combine biometrics and passenger data in a secure way across other ecosystem partners, such as hotels and airports and government. As touched on by U.S. Customs and Border Protection’s Program Manager Sikina Hasham:
“One area we’ve seen a significant amount of success in is facial comparison and biometric data. There is a service we’ve created to verify [the identity of] an individual boarding an aircraft…into the United States. If we could have more data for the verification from another government party, that would be really great for us.”
Operations. Flight operations are complex. It’s expensive and logistically intensive to support the many IT needs of an airline. From streamlining baggage tracking to ensuring safe cargo management and facilitating global payments, each task has its own unique requirements to bridge the digital with the physical. Blockchain provides a more fluid means to control complexity, as it can expand and contract alongside an airline’s needs. This fluidity creates new vulnerabilities, as JTV Managing Director Raj Singh pointed out:
“Can you trust the inventory to be the thing that you think it is? That’s one of the biggest challenges for blockchain: you have a digital world but as soon as you’re referring to something physical, the connection can be spoofed, or broken.”
If a malevolent party were to violate the security of this digital/physical link, there are real-world consequences. The same goes for cargo, baggage tracking, and other aspects of tracking physical items digitally. On the one hand, the ledger’s immutability protects privacy and security. On the other, a reliance on digital connections creates new vulnerabilities to address.
Supply chain. Whether its manufacturing airplanes from global components or tracing food from catering, aviation is logistics-heavy. Managing the supply chain via a distributed ledger would provide provenance on all items, and on-the-ground crew can “trust, but verify” that everything is as it should be. Other advantages of stronger supply chain management include “just-in-time inventory” for global maintenance crews and ensuring the security of information sharing across ecosystem partners.
What’s ahead for blockchain technology
Judging by the continued momentum and interest, blockchain remains at the forefront of what could be next for travel tech. With long-term roadmaps for bold innovations, many of the current blockchain pilots will transition into production phase over the next 12 to 18 months. There’s still plenty to prove, but the promise and potential are evident. We’ll know more as an industry over the next two years and we look forward to helping JetBlue pioneer a path forward.
Click here to watch our video recap of the event and save the date for our second Blockchain In Travel Summit — March 18, 2020 in New York City.
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