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World’s first blockchain airline ticket issued – here’s how this makes travel cheaper

Posted: 19 November 2019 6:47 pm
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For the first time, a plane ticket is on the blockchain. Here's what that actually means.

The world's first blockchain airline tickets have been issued, via the Winding Tree platform, for a Hahn Air flight from Dusseldorf to Luxembourg.

What does that mean?

"Ultimately, there is no difference in the ticket itself. The difference lies in the back end and the way the ticket is distributed and purchased," explained Jörg Troester, head of corporate strategy, industry and government affairs and Hahn Air.

"Blockchain holds many benefits. It is open-source, meaning all market participants such as airlines, travel companies, hospitality distribution systems can easily connect and exchange transactions. They benefit from reduced costs as they can interact with each other directly and perform transactions without intermediaries. The technology is also 100% secure... Another main benefit is that the blockchain creates security and trust. Therefore, it is easier for various types of companies to connect with each other," he said.

For travellers, the indirect end result is lower prices.

"Consumers will ultimately benefit from a reduction in costs and an increase in travel options," Troester said. "Due to more companies being able to connect more easily, transaction fees will be likely to get lower. And as more companies can partner with each other more easily, there will be more travel options and more possible combinations. Consumers can also book more travel services of different types through one single source."

How blockchain tickets lead to cheaper flights

What blockchain does is essentially serve as a neutral computing system. In this case, that computing system is the Winding Tree blockchain platform. This system acts as a transparently level playing field and a way for different companies to directly share data more efficiently and effectively in real time.

So when an airline ticket is on the blockchain, it means different companies in the travel ecosystem can interact with it more seamlessly. This is an essential part of the travel industry, where trips and connecting flights may span multiple airlines, hotel bookings, meals and other services all provided by different companies.

With blockchain, for example, one airline might directly purchase a seat on another airline for a customer who's booked a connecting flight. Or in the event of a delay, an airline can more easily find vacancies in local hotels for its passengers, and organise a bus service for them to get there and back, rather than frantically phone around for available services.

"The benefit of distribution through Winding Tree's decentralised platform is that travel companies can now make their inventory available to the public (in a b2b capacity) without having to worry about who will access their inventory, as the smart contracts ensure the owner of the inventory has full control of how the inventory is sold and by whom," said Winding Tree CEO Pedro Anderson.

As relatively simple as it sounds in theory, this is something that cannot be done without blockchain.

This is because businesses simply wouldn't trust each other with this level of responsibility, and data, without some kind of fully open-source, provably transparent and provably neutral playing field. Blockchain is the only kind of system that can provide that level of assurance.

Removing intermediaries

You can't hand that responsibility to a third-party intermediary service either because that intermediary will inevitably start playing favourites and extracting ever-growing fees from users if it gets too much power.

This has already happened to the travel industry.

A high degree of collaboration between different travel companies is necessary to serve travellers, which means shared standards. As such, over the years, the industry naturally coalesced around a small handful of intermediaries, all of whom monopolise their customers to a certain extent, use different services and extract significant fees.

But as time passed and technology improved, the value added by these intermediaries may not have kept pace with the costs they were extracting.

The end result is a fragmented, inefficient and expensive system, where you have flying cars, but they're still forced to go past the tollbooths on a poorly-maintained road – metaphorically speaking.

"Travel companies are used to handing the reins over to tech providers who in turn own them and their interactions with other businesses," Anderson said. "Winding Tree gives ownership and control back to the supplier, much like a direct booking.

"Airlines can finally work with the long tail of vendors which they did not have the resources to deal with, not only that but they can experiment and work with new technologies without having to go through an intermediary to give them permission to do so."

Tickets, please

Of course, it's not enough to just put an airline ticket on the blockchain. Its presence there is only as useful as the ecosystem that's also living there, interacting with the ticket and each other.

For Hahn Air, this blockchain ticket may be a placeholder of sorts, and something to have ready to go for when the rest of the industry catches up.

"We at Hahn Air are constantly exploring new technologies," Troester said. "With the first blockchain-based ticket, we’ve established that we are ready to apply the new technology and that we have the technical capability to generate Hahn Air tickets through blockchain-based channels. Our goal is to investigate and monitor the opportunities this technology holds for travel distribution, even if widespread acceptance is still a vision of the future."

Most travellers will never know that their plane ticket has a simulacrum in cyberspace. But someday, you might stop and marvel at just how much cheaper air travel is now than it was a decade ago and idly wonder at all the incremental improvements that made it that way.



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Disclosure: The author holds BNB and BTC at the time of writing.

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