Intro to Blockchain technology and its application in the Aviation Industry
by Sarosh Bhatti
Aviation Enthusiast - Strategist - Analyst - Forecaster and Planner
July 18, 2019
We all love new ideas, new business models, buzz words and new technologies and one that is getting a lot of attention is Blockchain technology.
The intent of this article is to briefly describe what Blockchain is, dive in to how it works and touch on its potential use cases in Aviation. Blockchain can be defined as a growing list of records, called blocks, that are linked using cryptography. Each block contains a cryptographic hash of the previous block, a timestamp, and transaction data. By design, a blockchain is resistant to data tampering. It is "an open, distributed ledger that can record transactions between two parties efficiently and in a verifiable and permanent way".
In a nutshell, Blockchain is a global system for mediating trust and selective transparency.
Here are five basic principles underlying the technology:
One of the key principles of Blockchain is its ledger and it is worthwhile to know how blockchain ledgers work. But before that lets take a brief look at traditional ledgers.
For centuries, banks have used ledgers to maintain databases of account transactions and governments have used them to keep records of land ownership. There is a central authority – the bank or government office – which manages changes to the record of transactions so they can identify who owns what, at any given time.
This allows them to check whether new transactions are legitimate, that the same $100 is not spent twice and houses are not sold by people who don't own them. Since users trust the manager of the ledger to check the transactions properly, people can buy and sell from each other even if they have never met before and do not trust each other. In this case, the middleman also controls access to information on the ledger. These ledgers are centralised and the middleman controls the system, the information and the transaction. The whole information is black boxed and is not fully visible to users.
Digitisation has made these ledgers faster and easier to use, but they remain centralised and black-boxed. Blockchain offers the same record-keeping functionality but without a centralised architecture or control. The question is how can it be certain that a transaction is legitimate when there is no central authority to check it. Blockchains solve this problem by decentralising the ledger, so that each user holds a copy of it. Anyone can request that any transaction be added to the blockchain, but transactions are only accepted if all the users agree that it is legitimate, e.g. that the request comes from the authorised person, that the house seller has not already sold the house, and the buyer has not already spent the money. This checking is done reliably and automatically on behalf of each user, creating a very fast and secure ledger system that is remarkably tamper-proof. Each new transaction to be recorded is bundled together with other new transactions into a 'block', which is added as the latest link on a long 'chain' of historic transactions. This chain forms the blockchain ledger that is held by all users. This is called 'mining'.
Blockchain can also be referred to as a data structure and that is, how data is logically put together and stored. Some other common data structures are databases (rows, columns, tables), text files, comma separated values (csv), images, lists, and so on.
The core difference between a blockchain and a database is centralization. While all records secured on a database are centralized, each participant on a blockchain has a secured copy of records and all changes in ledger. The true value of Blockchain is realized when there is an inconsistency — since each participant maintains a copy of the records, blockchain technology will immediately identify and correct any unreliable information.
One important question that usually arises is that who can use blockchain technology?
Blockchain technology has widely been associated with Cryptocurrencies because of Bitcoin. However, bitcoin is only a small part of the blockchain technology’s footprint in the world. The potentials for blockchain implementation are endless, especially because it can be applied in virtually any field to accomplish important tasks such as;
· Payment processing and money transfers
· Monitoring and tracking supply chains
· Retail loyalty rewards program
· Digital Identification
· Digital voting
· Real Estate, land and auto title transfers
· Food safety
· Medical and drugs record keeping and tracking
· Equity trading.
The world is only beginning to realize the vast opportunities and benefits offered by blockchain implementation with new potential uses being realized on a regular basis. The public blockchain continues to change how daily business is handled whereas the private blockchains allow companies to revolutionise their own internal processes for the better
Opportunities in Aviation
Commercial aviation is a complex industry due to the high number of stakeholders involved in delivering aviation related products and services. For example, it is estimated that from the time a passenger searches online for a flight to the time they arrive at their destination, approximately 26 stakeholders are involved in various steps of the passenger journey. Some key areas of opportunity are:
• Earning, spending and accounting of frequent flyer points
• Tracking and identification of baggage, cargo and spare parts
• Distribution and payment across stakeholders
• Passenger identification for seamless flow at the airport
• Identification and tracking of visas and travel documents
• Cargo supply chain
• Tracking carbon offsets
• Crew identity management.
There are several initiatives already underway in the aviation industry that are leveraging Blockchain. These include:
• Aeron is working towards Blockchain application in Aviation Safety
• Ozone has been positioned as an alternative distribution system for air transportation
• SITA FlightChain is looking into maintaining a shared ledger on flight information with
participation of delegated authorities
• Singapore Airlines’ Frequent Flyer Program is leveraging Blockchain to streamline
redeeming of points
Air France KLM has been testing Blockchain technology for aircraft maintenance.
While the value of Blockchain is quite strong, the approach has to be business outcome focused and remain solution-oriented throughout the process. Businesses often experience peer pressure to use certain methodologies or technologies but it’s the responsibility of the business to do enough due diligence to ensure that the initiative helps solve a business issue or opens up new business opportunities. The following decision tree is one of several available which can help in deciding if Blockchain is right for your business or not.
Hope that you liked the content, and feel free to contact me if you have any queries.
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