According to a market research published by Markets and Markets, the aviation blockchain market size is expected to reach USD 1,4 billion by 2025. Some of the key drivers that are influencing the growth in the next five years are increased traceability and transparency, multivariate applications of blockchain and reduction in cost and transactional complexities.
As more and more airports are focusing on digitalization and automating processes to increase the efficiency and pace of their operations, the airport segment is projected to grow at the highest rate during the forecasted period. Thanks to its characteristics and the advantages it brings in day-to-day operations, blockchain is being used in cargo and baggage tracking, passenger identity management and smart contract applications. Storing passenger information on blockchain for biometrics and ID tracking/management also allows airlines and airports to enhance their security.
China is expected to lead the growth in Asia Pacific
Coming back to the report, China is expected to lead the aviation blockchain market in the Asia Pacific when it comes to the regions that will record the highest growth. The report also mentions Malaysia’s efforts in improving airport operations with the help of blockchain. More precisely, facial biometrics with blockchain capabilities have been used by Malaysia Airports Holdings Berhad (MAHB) to assist in issues related to booking, boarding, and identifying passengers. The transportation and trading hubs, such as Hong Kong and Singapore, provide additional opportunities for the adoption of blockchain.
Huge savings in maintenance and aircraft finance
Blockchain can also bring massive savings to maintenance operations. According to PwC, efficiency gains enabled by blockchain could increase industry revenue by as much as 4 percent to US$40 billion, by cutting maintenance costs by about 5 percent (US$3.5 billion). Blockchain technology can transform maintenance logs, which at best are in cumbersome databases and, at worst, are in paper binders. The blockchain can help the industry ensure that parts procured are legitimate and can offer a “virtual copy” immutable record of the provenance of every part on the plane, every time it has been handled and by whom, from the beginning of the aircraft’s existence.
This visibility is profound and can take the practice of maintenance, safety and aircraft security to new levels. Blockchain could also streamline heavy maintenance visits and – together with predictive analytics – it can also allow aircraft operators to cut spare parts inventories. Participants in a blockchain-powered aerospace ecosystem can take the middleman out of the equation, thus reducing costs.
Airline leaders are already familiar with robotic process automation (RPA). Another familiar vector of disruptive innovation involves cognitive computing and machine learning. Now, blockchain is making fast inroads, and a lot of finance decision-makers are hurrying along the learning curve, informs Deloitte. As with other technologies, airline CFOs need more than attractive promises – they need proof of real solutions so they can make the right decisions for their organizations. In the airline industry, where concerns like safety and regulation make it unlikely to find first movers rushing into new technologies, blockchain faces a high bar for proof of concept.
A quick look around reveals that some airlines have already found places to pilot blockchain in their own operations and the trend is set to grow.
Tracking components and shipments
This is another area where blockchain can prove its edge. Given the industry’s focus on safety, knowing the source and ensuring the quality of all the components, parts, and other materials that make up an aircraft are critical. In MRO (Maintenance, Repair, and Overhaul), the complex value chain – which involves manufacturers, component resellers, airlines, service providers, and regulatory authorities – can make getting information on the origin and journey of components a challenge. Blockchain provides transparency throughout the value chain and an auditable record of the sources and histories of all parts and components. This traceability can also extend to baggage and high-value cargo shipments, which are handled by multiple players, including customers, airlines, transportation companies, airports, and local authorities.
Improving customer experience
An area of great interest when it comes to the interaction with passengers, so most airlines are focusing their blockchain efforts here. When members of an airline’s loyalty program travel on a partner airline, reconciling the miles or points flown and getting those credits correctly applied to the customer’s account can be difficult, error-prone, and time-consuming. Smart contracts can simplify and automate the process among airlines, minimize the risk of error, and increase customer satisfaction.
Many applications designed to strengthen customer loyalty are emerging. Singapore Airlines has developed a digital wallet that allows customers to use frequent-flyer miles at participating retail merchants, and Cathay Pacific Airways’ loyalty app lets partners and members use their rewards almost immediately, nearly in real-time. SITA Lab is testing a blockchain application that would allow passengers to create tokens on their devices that would be accepted across airports and borders.
Read more on how blockchain could take the aviation industry to new heights in our dedicated article.