A groundbreaking competition could help blockchain take to the skies.

The Aviation Blockchain Challenge, sponsored by the German airline Lufthansa’s innovation hub and the enterprise software company SAP, is seeking innovative proposals across the entire spectrum of the airline’s business, from flight operations to its supply chain to the passenger experience.

There’s no Air Blockchain just yet, but give it time.

“Blockchain is one of the game-changing technologies of our time, which we are systematically addressing as part of our digital strategy,” Thorsten Dirks, a member of Lufthansa’s board and the CEO of Eurowings, said in a statement announcing the challenge.

The aviation industry, which has had more than enough headaches involving security, passengers and fuel, among others, might actually be ready for blockchain-inspired disruption. Here are four ways that could happen.

1. The Boarding Pass Is Just the Beginning

The next time you fly, look at your boarding pass or ticket. That barcode represents data that must be shared among a broad range of organizations including the airline, booking websites, credit card agencies, airports, immigration and other government agencies, as well as partners such as hotels and car rental companies.

“A web of complex and seemingly endless data reconciliation is happening behind the scenes of every touchpoint of every traveler’s trip,” is how Accenture describes the process.

It’s not just passenger data, either. Blockchain can play an integral role in tracking airplane parts and maintenance as well as the complex financing and leasing arrangements that are common in the capital-intensive industry.

“While it’s already common for airlines to lease engines based on hours of use, spreading that model to other parts has been difficult because of complexity,” according to a post by Candice Irvin, Deloitte’s managing director and U.S. airline leader. “With smart contracts that use blockchain to self-execute transfers of value, the leasing model could apply to more equipment on each aircraft, on a micropayment basis that is standardized and trustworthy.”

2. Big Players Are Making Blockchain Moves

Enterprise players including Accenture, IBM, and Deloitte are exploring possibilities in the aerospace sector, but so are industry-specific technology companies. SITA, which claims its technology covers 95 percent of all passenger flight destinations in nearly 200 countries, last year tested a Hyperledger-based private permission blockchain called FlightChain in partnership with British Airways and airports in England, Switzerland, and the U.S., and found it superior to other data-sharing approaches.

“Our FlightChain project has demonstrated that blockchain is a viable technology to provide a single source of truth for data for airlines and airports, specifically for real-time flight information,” Jim Peters, SITA’s CTO, said last November. “While there are other technologies available for sharing data, the use of blockchain, and smart contracts in particular, provides ‘shared control’ and improves the trustworthiness of the data.”

As in other sectors, the internet of things (IoT) and machine learning are being combined with blockchain for greater impact. IBM has developed a proof-of-concept system in which blockchain-based data including flight schedules, weather and landing information are automatically analyzed to identify when airplane parts need to be serviced.

3. Loyalty Matters

Airlines compete for customers, and frequent flyer and other loyalty programs are important ways they seek to differentiate themselves from competitors.

The parent company of Singapore Airlines is already using blockchain to better appeal to its customers. lts KrisPay digital wallet, which the company calls the world’s first blockchain-based loyalty wallet, lets program members convert their miles into currency that can be spent using a digital app that displays a QR code at the point of sale of participating merchants. Developed in partnership with KPMG and Microsoft, the KrisPay program launched with 18 participating merchants, ranging from hotels and beauty parlors to gas stations and Lego retailers.

“By creating a miles-based digital wallet which integrates the use of miles into their daily lives, KrisFlyer members have yet another way to use miles instantly on everyday transactions,” said Singapore Airlines CEO Goh Choon Phong.

4. A Blockchain-Based Airline?

There’s no Air Blockchain just yet, but earlier this year Huafu Enterprise Holdings Limited announced a partnership with Taiwan-based Fair Eastern Airlines, or FAT, in which the airline will accept Huafu’s ALLN token for airfare purchases. As with Singapore Airlines loyalty program, ALLN’s developers envision the token, whose acronym stands for “airline and life networking,” being accepted by a wide range of retailers.

But that could just be the beginning. “Huafu hopes [the airline] could use a certain share of the income of ALLN as a fund to purchase aircraft and other peripheral assets” with the goal of improving air service to various regions of China and elsewhere in Asia, Huafu said.

But as with other places where blockchain’s promise meets customer expectations, hurdles still need to be cleared. The explanation of how to use tokens on FAT’s website is considerably more complicated than the already tortuous process of buying a ticket using fiat currency.

“If the ticket for the shift on the same day is still unable to transfer 30 minutes before the flight departure, it is recommended to pay for the ticket by other payment methods,” the site explains.

Mark Toner
Mark Toner is a Washington, D.C., writer and editor. He has covered business, technology, media, education, and healthcare for a wide range of trade and industry publications.