106 AUSTRALIAN AVIATION
of airlines and supplier companies
that maintain whole or partial copies
of a private blockchain. Essentially, if
a group of airlines all have encrypted
copies of their combined ticket
distribution databases, passengers can
buy tickets without the need for the
airlines to use (and pay) a company
that maintains a global distribution
system.
But the security benefits of a
significantly more scaled system – and
a public one – are greater: the larger
the number of sources of the “true”
blockchain, and the longer the chain,
the more impractical it becomes for a
malicious actor to take it over. This is a
complex matter for airlines and indeed
their regulators, which will need to
be persuaded that the benefits of a
public, rather than private, blockchain
measure up.
Yet, as SITA’s White Paper on
Flightchain, a test of a flight status
blockchain project it ran with
Heathrow, airline group IAG, plus
Miami and Geneva airports later in
the test, says, “A private permissioned
blockchain still needs governance and
operational oversight. Simply because
it is distributed and decentralised
does not mean it is self-managing. It
is important to choose a governance
model/organisation that does not
compromise the integrity of the
blockchain.”
Says SITA, “A distributed system
is resilient by nature. But while we
can say the network as a whole holds
a single version of the truth, for an
individual node we can only say ‘it
holds a single version of the truth,
eventually’.”
Moreover, SITA underscores
the need for active management of
the blockchain from the very start.
“Smart contracts are programs that
can update the state of data on the
blockchain and are a key element to
most enterprise blockchain use cases.
Smart contracts can be complicated
to define, update, redeploy and get all
participants into sync again. Strong
lifecycle management is required.”
“Smart contracts have no legal
status,” SITA concludes, yet provides
a glimmer on the future horizon when
it suggests that, “however, industry
standards could be encoded in smart
contracts”.
For an in-depth discussion of how
the economics of blockchain function,
the MIT Sloan School Working Paper
5191-16, “Some Simple Economics of
the Blockchain” by Christian Catalini
and Joshua Gans, is available online.
Early adopter airlines are searching
for the building blocks of blockchain
— and complementary technologies
“While we are still exploring its
benefits, blockchain may offer a
streamlined way to retail airfares
and ancillary products alongside
our current channels. In removing
complexity from the sales chain,
customers benefit from reduced
transactional costs, and airlines
benefit from swift and secure sharing
of information,” says Air New
Zealand’s Golan.
Part of reducing that complexity
involves reducing the number of
intermediaries between passengers
looking to buy tickets and the airlines
that want to sell them, while still
providing opportunities for innovative
ways to do so. Distributed APIs
— application programming interface,
simply defined as sets of definitions
and standards that allow developers to
create new uses for an airline’s systems
and data — are part of the picture.
“Lufthansa Group has engaged in
the development of APIs, for instance
supporting IATA NDC [the airline
body’s New Distribution Capability
standard], to offer a direct access to its
offers to customers and distribution
partners”, explains Markus Binkert,
senior vice president of distribution &
revenue management at the Lufthansa
Group.
“By integrating these APIs with
Winding Tree’s public blockchain,
Lufthansa Group enables allinnovative partners who develop
cutting-edge travel applications to
access these offers via a decentralised
and intermediate-free travel
marketplace.”
Lufthansa’s Lagardère tells
Australian Aviation that the
group is “looking at fostering a
future landscape where there are
fewer intermediaries, or at least
intermediaries that bring value and
not only cost, and blockchain is a
perfect forward looking instrument to
doing that.”
It’s not, Lagardère says, “only with
consumers direct, because the users,
the apps’ creators, they could very well
be travel agencies, or online travel
agencies, who have a value add for the
customer and ones who will present
the tickets over the network.”
“I’m not able now to say, it’s going
to be that specific app or that specific
app, looking like this or like that,”
Lagardère concludes.
“We take a more fundamental
approach. What’s fundamental,
actually, in this approach, is that we’re
talking about the public blockchain.
It’s not about saying, we’re going to
do a blockchain experiment within
our private systems and we’re going
to learn the technology of blockchain.
Here we are of course learning
the technology of blockchain, but
we’re also applying the concept of
blockchain to travel distribution. What
shape that takes, I think it’s also going
to be a byproduct of the users that join
us to experiment on the platform. I
think we’re going to see first usages, at
least in a proof of concept mode, in the
course of next year.”
Yet caution and understanding
are vital. SITA, in one of the learning
points from its recent White Paper,
highlights that “it is still early
days in the technology lifecycle
for blockchain. A blockchain can
be complex to set up and manage,
especially when compared to point
and click cloud services like AWS
or Azure. Look for ‘blockchain-as-
a-service’ offerings, and beware of
vendor claims around maturity. Either
ensure you have correct skill-sets, or
use ‘blockchain-as-a-service’ offerings
or simply wait until the technology
matures.”
Airlines have not traditionally been
strong in the integrated information
technology sector, with few of the
promises made about big data’s
applications to commercial aviation
yet fulfilled. Blockchain, like any
IT tool, will only be as useful if its
wielders know how to use it.Blockchain
‘The
algorithm
adjusts so
it doesn’t
matter.’
MAKSIM IZMAYLOVLufthansa Group is using
blockchain to allow innovative
partners to develop cutting-
edge travel apps.ROB FINLAYSONAir New Zealand is exploring blockchain’s
potential benefits.ROB FINLAYSON