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Future of Aviation and Tourism Industry Lies in Blockchain Technology

Thanks to its inherent technical features, blockchain offers verifiability, transparency, and security of environmental attributes of SAF.

Sabine Brink, Shell’s blockchain lead

Recently, both practitioners and academics have shown a great deal of interest in blockchain technology. Still, a number of solutions to enhance many industries have already been developed. Efforts are being undertaken to develop more collaborative and integrated cities. This has the potential to give more efficient and productive ways to live, work, and network via integrative platforms connecting many stakeholders. For example, a venture that has taken the leap to the pilot phase as an ambitious project between Shell, Amex and Accenture is aimed at enhancing the availability and utilisation of sustainable aviation fuel (SAF).

Through the use of blockchain technology, tourism and hospitality enterprises will be able to handle transactions connected to sales, operations, finance, and administration, as well as interact with external parties, including the government. It might help the development of sustainable hospitality and travel industry, which cannot be realised without the cooperation of all stakeholders.

International Air Transport Association (IATA) has listed blockchain in their research, Future of the Airline Industry 2035, as one of the technologies that might significantly influence the future of air transportation among other change agents, such as new forms of consumption and the privatisation of infrastructure.
Blockchain is a distributed database consisting of a list of transaction bundles, known as blocks that are interconnected. In a complex decentralised method, once these blocks are recognised as part of the overall chain, they cannot be modified simply. In order to modify a single block, every subsequent block would also need to be modified, making modification almost impossible. The blockchain is not administered by a central authority; rather, the technology consists of a peer-to-peer network, wherein decentralised servers store copies of the entire blockchain. The so-called miners contribute to the process of adding and confirming new data. They tackle a computationally challenging challenge to add and validate the data and are subsequently compensated for providing their resources. Each new block introduced to the chain carries a unique identifier, the hash, depending on the blocks that came before it; this enables more precise data monitoring and better security. Diverse blockchain-based systems use so-called smart contracts that allow the reliable completion of online contracts between unidentified parties. There is the potential for cryptocurrency transactions and smart contracts to disrupt numerous sectors, including hospitality and tourism.

Typically, the introduction of new technology is accompanied by a great deal of hype. As blockchain matures, it has the potential to have a similarly disruptive effect as the Internet had when it first emerged. The objective of the web was to facilitate the global flow of information; the promise of blockchain is to facilitate the frictionless movement of value across digital channels. The strategy IATA has adopted is, to begin with, the requirements of the client, then addressing their pain areas and chances to offer additional value. IATA has conducted research and development (R&D) on this technology over the last five years, beginning with prototypes and, in some instances testing in a production setting where a compelling use case existed.

Numerous airlines and their collaborators have been concurrently testing the blockchain technology in a number of application scenarios. Initial advancements are tangible enough to motivate additional research and consider prototypes’ alternatives.

The majority of the present systems used to handle data in the aviation industry are centralised and do not adequately provide trustworthy data provenance, immutability, openness, auditability, and traceability.

Blockchain is an innovative and disruptive technology with the promise to offer trustworthy transparency, accessibility, traceability, and immutability for recorded and shared data and transactions in a decentralised and secure way that does not rely on a trusted third party.

Currently, blockchain technology is through a period in which its maturity increases and its tangible advantages become more apparent. Nevertheless, it is still not obvious how to utilise the advantages in the context of an applicable use case when this technology is the optimal answer. The classification of a vast array of use cases continuously reveals the creation of clusters around a few application domains, with many use cases using Tokenisation and Smart Contracts. There are several reasons why this technology is ideally positioned as a solution to both commercial and non-business issues. However, there are still a few significant obstacles that must be addressed before widespread adoption can occur. The primary challenges have been recognised as scalability, governance, and cost of use.

While blockchain applications for air transportation are still in their beginnings, the 2018 Air Transport IT Insights study by Société Internationale de Télécommunications Aéronautiques (SITA) indicates that 59% of airlines are funding the technology through pilot or research projects, which is up from 42% in 2017.
Nowadays, airlines depend on third parties to store and exchange passenger and operating data. This comprises passenger and sales data, reconciling, and luggage information that is maintained in silos that cannot interact with one another. Blockchain is here to eliminate this barrier, reducing the provider’s dependency on middlemen and allowing for quicker automated transaction processing, real-time information exchange, and less system maintenance. New, immediate payment networks based on blockchain technology, electronic wallets, as well as other innovations are transforming the future of payments.

The value chain of the aviation sector is naturally very collaborative, with numerous partnerships between service providers orchestrating the supply of travel-related goods and services. Smart contracts have the ability to facilitate the simplification of interactions between businesses, specifically to disrupt procedures like billing, reconciling, settlements, and accounting.

Blockchain has actual advantages, but to maximise these benefits, the first approach ought to be solution-driven discovery, analysis, and deployment, with an open mind toward alternative options throughout the process. Furthermore, several design possibilities pertaining to the kind and configuration of blockchain must be properly evaluated and contrasted. The suggested course of action is to examine blockchain as one of the viable options for the sustainable future of the aviation sector in every aspect.

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