Loading

Blockchain: potentially transformative technology that could help rebalance the aviation value chain

According to IATA SVP Financial and Distribution Services Aleks Popovic, IATA's financial settlement system hands USD7.7 billion annually to financial institutions in fees (22% of the world airline industry's estimated 2016 net profit). Financial institutions are just one of many intermediaries in the aviation value chain, each taking a cut.

IATA, airlines and other aviation organisations are understandably researching blockchain technology's potential. It could help to reduce airlines' dependence on intermediaries, to lower costs and to streamline processes.

The best known application of blockchain is bitcoin, the mercurial cryptocurrency, whose benefits for payment include speed of processing, lower costs versus credit cards, lower risk of fraud, and its cross-border nature. It also widens the potential customer base, since bitcoin payment does not require a credit card, or even a bank account.

But blockchain has huge transformative potential beyond cryptocurrency. An open, distributed ledger that records transactions in a manner that is permanent and verifiable, blockchain allows parties to exchange money, data and contracts without involving a third party. It enables 'smart contracts', which automatically trigger an action on the fulfilment of agreed conditions.

Blockchain's potential uses in aviation include areas such as passenger and operational data, loyalty, baggage tracking, MRO, security and distribution.

This CAPA Premium Analysis article is 2,534 words.

To access CAPA Premium Analysis you need a CAPA Membership

Your window into the latest insights

CAPA employs an industry-leading Analyst team based in Europe, North America, Asia and Australia who offer unique perspectives and independent and accurate commentary of critical industry developments globally. CAPA Members rely on our Analysis to unlock valuable insights and actionable intelligence to keep ahead of the game.

Big picture strategic view

Our Analysts don’t just report the news - they take a big picture strategic view of aviation dynamics, issues and trends and analyse the implications of these developments for you.

Global intelligence

The CAPA Analyst team is based globally to ensure our CAPA Members have access to independent, unique perspectives covering an entire spectrum of daily, worldwide commercial aviation developments.

Customise your Alerts

CAPA Members can use CAPA Alerts to receive daily, weekly or monthly and customised updates on our Analysis.

I'm very impressed by the factual and detailed analysis CAPA is always doing.

- CEO, Airline Member
To learn more, contact us:
Phone: +61 2 9241 3200 | Email: membership@centreforaviation.com