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Why Aviation Hasn’t Adopted Blockchain

The Covid-19 pandemic devastated the aviation industry, resulting in airlines losing a staggering 168 billion dollars in 2020. With revenues plummeting by 55 percent, the industry found itself set back 16 years to 2004 in terms of nominal growth. The pandemic also brought about a significant shift in travel patterns, rendering past customer data useless for forecasting future trends. Uncertainty became the norm.

The aviation sector, which relied on outdated systems, faced disruptions as travel came to a standstill. To streamline the process and adapt to the new normal, innovative solutions such as contactless travel, bag tracking, and identity verification were needed. This opened the door for blockchain technology to revolutionize an industry grappling with legacy technologies.

Surviving the pandemic and reducing costs while ensuring safety and retaining staff were immediate challenges for airlines. However, long-term challenges included modernizing core technologies and adopting resilient architectures. Technologies like blockchain, big data, cloud computing, predictive analytics, and business intelligence emerged as potential game-changers, offering modernization and cost reduction avenues.

Forward-thinking companies seized the crisis as an opportunity to drive innovation. For example, AI was utilized to determine cargo capacity on passenger planes, taking into account factors like weather conditions and passenger loads. AI predictions provided airlines with granular insights beyond the capabilities of traditional aviation tools.

Throughout and after the pandemic, airlines explored contactless travel solutions, innovative blockchain-based loyalty programs, and enhancements to call center processes. Aviation innovations expanded beyond digital technologies, with manufacturers developing electric aircraft capable of vertical takeoffs and landings, revolutionizing the way we travel. Research on commercial supersonic flight and sustainable aviation fuels also gained traction.

Blockchain’s potential to revolutionize aviation is evident from its projected market growth. The aviation blockchain market is anticipated to reach $1.394 million by 2025, growing at a compound annual growth rate (CAGR) of 22.1 percent. Blockchain finds application in various areas, including identity verification, digital health passports, baggage handling, leasing and maintenance, payment reconciliation, cargo tracking, and more.

Provenance, in particular, holds promise as blockchain technology allows for the transparent tracking of cargo, passenger baggage, spare parts, and even frequent flyer miles. The need for modern settlement systems in the evolving airline industry creates further opportunities for blockchain and tokenization.

The Covid-19 pandemic also accelerated the adoption of blockchain-based self-sovereign identity solutions, enabling efficient management of identification processes. Blockchain-based digital health IDs offered airlines a way to navigate new entry requirements efficiently. Sovereign identity empowers users with control over their personal information and access rights.

Despite the promising potential, hurdles remain in adopting blockchain technology in aviation. The industry’s legacy technology, dating back to the 1960s, poses challenges in transitioning to modern systems. Consumer education, regulatory frameworks, and bandwidth limitations are additional obstacles. Harmonizing global regulatory standards with evolving technology poses a potential delay.

Nevertheless, as companies and governments gain clarity on blockchain’s capabilities, the aviation industry has an opportunity to embrace a secure, fast, flexible, interoperable, trustless, confidential, and user-friendly technology stack. By overcoming these hurdles, the industry can position itself for a resilient and technologically advanced future.

 

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