Lufthansa & SAP Aviation Blockchain Challenge for entrepreneurs

Summary

• The Lufthansa/SAP Aviation Blockchain Challenge seeks ideas by 31-Aug-2018 in three areas: the traveller, airline and supplier challenges.
• Blockchain is an open, distributed ledger with transformative potential.
• Lufthansa and many other aviation industry participants also have other blockchain initiatives.

Ideas are sought by 31-Aug-2018

Ideas can be submitted in the three categories until 31-Aug-2018 and further developed with Lufthansa Group and SAP. Participants can also apply for a specific pilot project within the context of the Lufthansa Innovation Forum.

The attraction of the challenge to entrepreneurs is that winning teams can access Blockchain-as-a-Service from SAP to develop their product and can exploit Lufthansa Group for access to all areas of aviation to drive applications for their projects.

There is also a mentoring programme for selected participants with experts from the Lufthansa Innovation Hub and SAP.iO Berlin Foundry.

There are three categories for the challenge

The three categories of the Aviation Blockchain Challenge embrace all major areas of aviation workflows. They are as follows:

1. Traveller challenge

2. Airline challenge

3. Supplier challenge

The traveller challenge is all about making the passenger experience more efficient and seamless. This involves the entire travel chain, from booking and purchasing flights to loyalty programmes and airport identification.

The airline challenge seeks ideas to improve airline operations and processes, for example by optimising the sharing of data across company and departmental boundaries.

The supplier challenge focuses on ideas to rethink maintenance and related aspects of the aviation supply chain, from document tracking and digitisation to the transparent verification of documentation.

Blockchain: an open, distributed ledger

Blockchain is an open, distributed ledger that records transactions permanently, verifiably in a very secure manner. It enables smart contracts, which automatically trigger an action on the fulfilment of agreed conditions.

Potential aviation applications could involve passenger and operational data, loyalty, baggage tracking, MRO, security and distribution.

The best known use of blockchain technology is as the basis for bitcoin, a cryptocurrency. Blockchain has also found applications in a variety of other areas of activity, including voting, royalty collection, governance, medical data storage and managing power grids.

It has significant potential in sectors such as banking, insurance, supply chain management, ride sharing, cloud storage, health care, social benefits, crowd funding and tracking donations in the charity sector.

Lufthansa and SAP recognise blockchain's transforming potential

Thorsten Dirks, Lufthansa Group Executive Board Member in charge of Eurowings and Aviation Services, calls blockchain "one of the game-changing technologies of our time".

He says, "By combining our aviation industry expertise with the blockchain technology of a world market leader [SAP], we are creating the ideal worldwide framework for addressing blockchain entrepreneurs with an affinity for travel and mobility".

Deepak Krishnamurthy, Chief Strategy Officer & Executive Vice President of SAP, is equally enthusiastic about the Aviation Blockchain Challenge: "With our industry leading SAP Leonardo Blockchain platform and Lufthansa's market leadership and expertise in Aviation, we can foster a new innovation ecosystem that can potentially transform the entire travel industry".

Lufthansa has a number of initiatives in blockchain

The aviation industry has been examining possible uses of blockchain for some time, with Lufthansa taking a number of initiatives.

Last year, Lufthansa Industry Solutions (the group's consulting arm) launched Blockchain for Aviation (BC4A), an initiative to assess potential applications of the technology in aviation and to agree standards.

The Lufthansa Group is also working with (and has invested in) Winding Tree, a Swiss travel distribution platform that uses open-source blockchain technology aiming to lower the cost of travel to B2B customers and improve profitability for providers.

SITA is exploring blockchain's potential in aviation

In Jul-2018 SITA Lab, the research arm of SITA, launched Aviation Blockchain Sandbox, a project to explore the potential of the technology.

This follows its 2017 FlightChain initiative in conjunction with Heathrow Airport, IAG, Geneva Airport and Miami International Airport. This demonstrated the viability of blockchain for providing a single source of truth for real time flight data with shared control and improved trust.

Aviation Blockchain Sandbox will implement FlightChain, before moving to a second phase which will test the use of smart contracts in specific airline and airport operations. The third phase will enable participants to participate in the running of the network.

As a technology company owned by more than 400 airlines, SITA seems well placed to carry out collaborative projects of this nature.

Singapore Airlines' KrisPay is a blockchain-based digital wallet

Singapore Airlines has launched KrisPay, a miles-based digital wallet based on blockchain technology, developed in collaboration with KPMG Digital Village and Microsoft.

This allows miles accumulated in Singapore Airlines' KrisFlyer FFP to be converted into KrisPay digital currency, which can be used to pay for services at 18 merchants in sectors that include petrol, retail and beauty services.

Other examples of research into blockchain in aviation

There is a range of other projects looking at specific areas for blockchain's possible application in the aviation context.

For example, Dubai Airport aims to develop a gateless border using blockchain and biometric technology, after the Government of Dubai signed an agreement with developer ObjectTech.

IAG is working with Vchain Tech, a company in which it has invested through its Hangar 51 digital accelerator programme, in the area of digital identity. Vchain Tech uses blockchain technology to build SaaS (Software as a Service) to help airlines share data safely and securely when passengers take connecting flights.

Air France-KLM is also looking into possible use cases for the technology, particularly in improving maintenance processes.

IATA hopes blockchain can help to rebalance the aviation value chain

IATA has said that blockchain and its derivatives have the potential to reform the financial and legal sectors by "democratising access, reducing friction in the economy and bypassing traditional banks and other financial organisations".

Financial institutions, just one of many intermediaries in the aviation value chain, take USD7.7 billion annually from airlines in fees. The airline industry body is interested in examining the role that blockchain might be able to play in rebalancing the value chain in aviation.

Blockchain is set to play a significant role in aviation's future

The above examples provide some illustrations of the way the aviation industry is actively seeking to embrace blockchain technology. There is yet to be a killer application for which the use case has been comprehensively established.

Predicting what that application might be, and when it might happen, is fraught with uncertainty. There is still a deal of hype surrounding blockchain, and many initiatives and start-ups in this area will likely come to nothing.

Nevertheless, it seems increasingly certain that blockchain technology will play a significant role in aviation's future.

The Lufthansa/SAP Aviation Blockchain Challenge may be the first comprehensive initiative by the industry to prompt entrepreneurs for practical, commercial applications across the full range of aviation processes.

See related reports:

• Blockchain: potentially transformative technology that could help rebalance the aviation value chain
• Blockchain technology: potential to improve data visibility & commonality could benefit aviation MRO