Travel tech leaders are betting on blockchain to transform nearly every aspect of the travel journey, making transactions simpler, more affordable, and more trustworthy, for both providers and consumers.
Airlines and travel agencies have never faced so many challenges around identity, service, and connecting travelers to positive experiences across the lifecycle of every trip. From chargebacks to fraud, from distribution logistics to the rapidly expanding universe of data-management choices, when it comes to solving for the digital realities of travel today, the stakes are high.
Fraud costs airlines some $1 billion annually, according to the IATA. Distribution and other fees have totaled more than $10 billion in recent years, Skift reports. The good news is, solutions are developing at the pace of technology.
The development and evolution of blockchain technology, potentially the most important step in the evolution of travel business in the history of the industry, is underway. Innovating companies are building blockchain platforms that stand to transform the payment and settlement ecosystem. In the following sections, we look at key factors already coming into focus for players in the travel space.
Blockchain: Identity at the Core of Every Journey
Most travel transactions are virtual transactions, subject to all the complications of ensuring that identities are verified and dynamically connected to each traveler across the whole of their trip. This challenge is central to the very nature of the solutions that blockchain offers: a public ledger which is a virtually immutable history of transactions, blockchain is a definitive representation of the final ownership of an asset — bookings and tickets being our cases in point.
One company that is bringing blockchain to bookings and tickets is Further Network — and its leadership frames the transformation as being already underway.
“We should no longer talk and think about blockchain’s transformation of travel as if it’s still 2017, as if this is a futuristic concept still to come,” said Kadir Ozgur Oguz, Further Network’s co-founder and CEO. “Blockchain is happening to travel right now. We are integrating blockchain-based transaction solutions at aviation companies as we speak, and the future we can frame is not build on ifs, it’s built on actual benefits and how significant distributed ledger advantages will evolve in 2018, 2019, 2020, and beyond.”
To understand how blockchain is changing travel, according to Oguz’s industry view, one model would be that of a Smart Travel Record (STR), which is his company’s key solution in the space. This digital record on the blockchain is built to contain every detail of the trip, every contract, every condition, start to end. Further Network describes it as follows.
- The STR will live within a platform that airlines and agencies could access — any stakeholder in the chain should be able to, actually, from hotels to car-rental offices to global distribution systems, to consumers as well.
- Vertical by vertical, the STR will provide additional levels of detail. For an airline, for example, the STR will include the traveler’s ticket data as a Smart Passenger Record. Hotel bookings will be captured in a Smart Guest Record, and so on. All of these will be interconnected and all the data in all these records will be responsively managed by the automated platform.
- As the details of a trip change, the STR will cross-check every condition and parameter and also introduce consumer-friendly changes and opportunities — a car reservation can be created to facilitate travel to or from an airport, for example, or a seating opportunity could be identified and presented when an itinerary changes; a hotel booking could be automatically updated, and so on.
Key to all this is that the STR and all the sub-units within it are immutably secure, attached to the holding traveler, and automated. Data management as the industry knows it changes; the resource-intensive factor of it falls away. Partnerships are underway for Further Network, and the solutions its creating are already slated for integration at Vista, a leading Turkish travel agency representing Carlson Wagonlit Travel, and Turkey’s Pegasus Airlines, a low-cost carrier which reported double-digit growth in 2017. Furthermore, as the next section explores, the promise of the blockchain-powered future is one in which — thanks to automation and streamlining — the cost of doing business comes down while the quality and reliability of the service provided improves.
Blockchain as the Future of Travel: Lower Cost for Better Travel
Data limitations and the shackling of present-day billing and settlement plan processes to unique provider systems means inefficiencies and fewer options. Standardization is rare. The need for cumbersome format-to-format translations means lost time and expended resources. All of this works out to be an expensive model: the billing and settlement plan (BSP) that any one airline or travel agency implements is cumbersome and prone to costly mistakes — the very scale and scope it needs to encompass make this a virtual certainty for the business.
The future of building a billing and settlement plan on top of a blockchain model, however, means advantages that cascade into the heart of operations throughout the travel industry. Blockchain solutions bring the real-world, real-time potential of lower transaction costs and better profit margins to travel organizations in all verticals. The following list highlights some of the ways these advantages come into play.
- Automated creation and tracking of tokens between stakeholders would mean significant reductions of needed back-office reconciliation time and resources. It can take days for reconciliation and settlement processes, plus there’s the daily tally of hundreds of tons of documentation, and both are reduced if not eliminated by the new technology in play.
- From the time a ticket is sold, the blockchain system would divide money between recipients, handle settlement — using any number of currencies, fiat, and crypto — and do so in a truth-checked, rules-adherent, and transferrable way.
- For an airline, especially across multiple-provider journeys, this would mean shorter payment intervals, greater ability to keep their money in a currency-friendly region, and cuts to the commissions and fees typically encountered in a manual-transaction ecosystem.
- For a travel agent, the blockchain solution stands to transform the idle-money equation. Being able to reconcile at a near-instant pace means the hundreds of thousands of dollars (per transaction) typically held in guarantee against risk are no longer a factor in the future.
In short, the business of travel would become easier, more verifiable, and cheaper. Blockchain opens windows onto additional possibilities too: digital passenger wallets with biometric IDs, verifiable peer-to-peer ticket and booking distribution, proactive passenger-service events prompted by blockchain data, and more.
Every player in the space, business to consumer, stands to win in a future of travel that turns on blockchain. For organizations that take first steps into this distributed-ledger realm, it’s a future that’s already taxiing to the gate.
Learn more about how blockchain is transforming travel. Visit Further Network and download their white paper on the topic, and watch Skift for additional news as the company unveils new partnerships with additional providers in the coming months.