A chain of blocks
Applying blockchain technology to travel
By Christian Huff
significant amount of discussion has revolved around blockchain and what it brings to the table, from bitcoin to the theoretical takeover of the internet. Granted, blockchain has made huge inroads in the technology space (especially in cryptocurrency), but just how far can we push this technology? And what does it mean for the travel sector?
A significant amount of discussion has revolved around blockchain and what it brings to the table, from bitcoin to the theoretical takeover of the internet. Granted, blockchain has made huge inroads in the technology space (especially in crypto currency), but just how far can we push this technology? And what does it mean for the travel sector?
Blockchain has gained an enormous amount of traction around the world during the last few years, and even more so in recent months. In fact, many industries, such as agriculture, academia, financial, healthcare, energy, property and government, use blockchain to revolutionize stale business models. Industry frontrunners that have incorporated blockchain into their strategies have realized substantial advantages, including reduced costs, heightened security, increased transparency, faster transaction times, greater efficiency, versatility and myriad other benefits.
As with many industries, blockchain presents significant opportunities for the travel industry. Sabre is investing in specific areas, like fulfillment and loyalty, that can help airlines reap the same benefits afforded to these other industries through blockchain technology.
Fullfilment Blockchain Model
Knowing that the blockchain ecosystem consists of a miner, a ledger, smart contracts and digital wallets, building a fulfillment model that needs an accounting line (ledger), a mediator (smart contracts) and payment model recognizes the technology's strengths.
Blockchain technology is a transaction-based ledger system where the transactions are recorded and replicated in real time across a network via a consensus mechanism, thus forming a sequence of time-stamped blocks called blockchains. Once a transaction is added to a block, it cannot be changed. Therefore, any changes to an item require adding a new block detailing the change or addition, as opposed to editing the block. This makes blockchain self-documenting and secure, which is why many businesses and industries are incorporating it.
Three other components that complete the blockchain ecosystem include smart contracts, miners and digital wallets.
Smart contracts and miners play vital roles in the trust component of blockchain, while the digital wallet increases the flexibility of the solution.
Smart contracts are digital representations of desired action or agreements taken based on a specified trigger in the chain. For example, the contract could be to add a commission percentage to the ledger, if all requirements are met, or to allow the execution of a sale, if all necessary data are presented. A smart contract can also provide viewership and ownership rights. These rights could extend to having a miner approve and action a request, meaning, to take action based on the specifications of the trigger, or to take action if all the requirements are met and the data are presented.
Miners are typically used in a public blockchain. They are the gatekeepers of the chain. A miner is responsible for ensuring the content is accurate and processed accordingly. In addition, a miner can be the approver of a contract. Thus, a completed and trusted action within the chain only occurs when the smart contract ensures the terms are met, and the miner ensures the content is accurate and processed.
Just like a person keeps his driver’s license and money in his wallet, the digital wallet is responsible for maintaining identification, security and, if needed, it can manage the currency.
Applicability of blockchain
The response time of a private blockchain, which is around 10 seconds depending on the brand, is better suited in near real-time (asynchronous) solutions versus real-time (synchronous) solutions.
The reason for the slower response time is twofold: proof of work and lack of indexing. Proof of work is primarily in the public blockchain space and essentially means the system must solve a puzzle before processing the request. This puzzle is to ensure accuracy and proves the system can support the work. As for indexing, the system can’t identify the exact location of the specific content source. So, to perform its audit, the system must scan each line of the datastore to find all relevant content, much like Microsoft Word does with the “find” command.
This may seem somewhat limiting, but the reality is that many applications in the travel sector that use asynchronous processes. These processes or solutions are just as vital to the industry as real-time functions.
Examples of such processes include ticketing, customer payments, payment distribution, agency commissions, profile and loyalty. The complete list is much more extensive; however, these examples are appropriate proof points for this discussion.
Blockchain can be adapted to support myriad options as compared to simply being the technology behind bitcoin. When looking back at the building blocks that make up blockchain, you can envision an ecosystem that fuels innovation.
Applying blockchain to travel
There are many opportunities for airlines to leverage blockchain in an asynchronous model. Sabre’s fulfillment and loyalty products are perfect examples. Embedding blockchain into the fulfillment model will benefit the entire ecosystem while simplifying an airline’s audit process.
The fulfillment model for airlines is commonly referred to as ticketing. Let’s review the life cycle of a ticket and map it to blockchain as a technology:
- A ticket is generated at the time of purchase.
- The ticket is validated to ensure the traveler meets the qualifications of the fare (smart contract to validate).
- The commission owed to the travel agency must be accurate and recorded (smart contract to validate and document).
- Payment is completed (smart contract validates content, miner audits and processes, and money is transferred via digital wallet).
5. The traveler completes the journey
(smart contract to
validate based on lifted ticket).
6. The money between two or more
interlin-ing carriers in the
journey are properly pro-rated and
recorded (smart contract
7. An audit is performed, and the monies
can be distributed
(miner ensures the chain is clean and
8. Monies are distributed (digital wallet).
Every aspect of the fulfillment model is supported by blockchain as a technology. The value proposition for reducing the complexities to airlines and travel agencies alike is significant, thus reducing total cost of operations for both parties.
Sabre is also working on a loyalty prototype solution using blockchain. Just like fulfillment, loyalty has similar capabilities that can take advantage of blockchain. The use of smart contracts and miners makes blockchain a trusted source. This trust simplifies work across airlines, hotels and any other products Sabre supports.
It could generate newfound opportunities for domestic suppliers to gain alliances across the globe, which, in turn, provides a comprehensive solution to its travelers. In other words, two different airline brands can work together via a loyalty program to offer customers more options when traveling beyond the reach of a single brand.
As with the fulfillment model, the digital wallet will store and protect passenger information, as well as allow for purchasing of miles or other products suppliers care to offer. Since the ledger cannot be deleted, passengers can see the history of their travel credits, including how they earned and used them.
The opportunity for blockchain in the travel sector is significant, and Sabre is well underway in exploring new innovations to apply it across the travel ecosystem. Blockchain is not just a cryptocurrency or a ledger — it can be used for simplifying processes that otherwise can be very intensive. In addition, its trust factor can bring suppliers together, thus offering comprehensive solutions to their travelers.
Soon, the technology will start moving into real-time solutions. New companies are developing solutions that eliminate the traditional blockchain models and are building new database models called hybrid blockchain. These new databases can index the data, thereby allowing the system to identify the exact location of the content, which will increase response times to subsecond. With these advancements, Sabre will be at the forefront in blockchain as an end-to-end distribution solution. /A
For additional information about how blockchain technology can be applied to airlines or other related business, contact Christian Huff.
Christian, director of research, has more than 20 years in aviation and the application of technology. Prior to joining Sabre, he worked in distribution at both Trans World Airlines and Spirit Airlines. At Sabre, he was an enterprise architect and led Sabre’s solutions architecture team for many years. He currently works in Sabre’s product innovation group, where he explores new technology and its application to travel.