Why Aviation Hasn’t Adopted Blockchain

The Covid-19 pandemic devastated the aviation industry, causing airlines to lose a staggering $168 billion in 2020. With revenues down by 55 percent, the industry found itself going back 16 years to 2004 in terms of nominal growth. The pandemic has also brought about significant changes in travel patterns, rendering past customer data useless for predicting future trends. Uncertainty became the norm.

The aviation sector, which relies on outdated systems, has faced disruptions due to grounded travel. In order to streamline processes and adapt to the new normal, innovative solutions such as contactless travel, bag tracking and identity verification are needed. This opens the door for blockchain technology to revolutionize industries that are grappling with legacy technologies.

Surviving the pandemic and reducing costs while ensuring safety and retaining staff is an immediate challenge for airlines. However, long-term challenges include modernizing core technologies and adopting robust architectures. Technologies such as blockchain, big data, cloud computing, predictive analytics and business intelligence are emerging as potential game changers, offering modernization and avenues for cost reduction.

Forward-thinking companies use crises as opportunities to drive innovation. For example, AI is used to determine cargo capacity in passenger aircraft, taking into account factors such as weather conditions and passenger loads. AI predictions provide airlines with detailed insights beyond the capabilities of traditional aviation tools.

Throughout and after the pandemic, airlines are exploring contactless travel solutions, innovative blockchain-based loyalty programs, and refinement of call center processes. Aviation innovation is expanding beyond digital technology, with manufacturers developing electric aircraft capable of vertical take-off and landing, revolutionizing the way we travel. Research on commercial supersonic flight and sustainable aviation fuels is also gaining traction.

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

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

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

Despite the promising potential, there remain hurdles in adopting blockchain technology in aviation. Industrial legacy technologies, dating back to the 1960s, pose challenges in the transition to modern systems. Consumer education, regulatory frameworks, and bandwidth limits are additional barriers. Aligning global regulatory standards with evolving technologies creates the potential for delays.

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