How Blockchain Could End Travel Industry Pain Points

Trond Vidar Bjorøy heads new product development and implementation for Nordic markets at travel management firm ATPI.

In this opinion piece, Vidar Bjorøy argues that blockchain can eliminate a number of pain points for both travellers and travel companies. 

luggage, lost

At this point, most blockchain enthusiasts know that distributed ledger tech has potential beyond fintech. Yet, one industry that hasn’t seen much attention from those enthusiasts is the travel industry. And it’s one that deals regularly with a number of pain points that blockchain technology has the potential to solve.

ADVERTISEMENT

Here are some of the more notable issues and how blockchain could help:

1. Overbooking

Everyone saw that man get dragged off a United Airline’s flight last week, right?

Blockchain’s ability to prevent double spending could in theory remove the problem of double bookings in the industry, which would hopefully (for both passengers and airlines) eliminate instances like this from happening.

It should be noted, though, that overbooking is very much a part of a decades-old strategy to increase profits and optimize resources, so unless the practice is made illegal, it might not be the use case that will drive widespread adoption of blockchain in the travel industry.

2. Fraud

Merchants that sell travel are typically seen as high risk because of the amount of refunds and chargebacks that occur in the industry.

But with blockchain, once a payment has been made, typically you can’t reverse it. And this mechanism will make fraudulent cases easier to spot and less likely to occur.

Blockchain could also ease PCI DSS compliance (a credit card security standard), at least for travel management companies and other incumbents in the space.

In a blockchain-enabled world where cardholder data is no longer stored in corporate databases and instead stored on a distributed network, along with the booking transactions – to whom does PCI apply? Probably the companies that develop the solutions that will let travel companies store our sensitive data on the network.

3. Identity and reputation

A big part of the world’s population is excluded and disconnected from the global economy today.

Decentralization through crypto-economies will enable billions of people to get access to basic financial services, connecting them with the rest of the world. And to give everyone in the world the opportunity to travel, consumers need a means of proving their identity, one that is impossible to forge or change. This could be provided through access to reputation-based identity systems.

Even though there are identity systems in use for authentication today, like federated identity and social login, you can’t easily build on them to pull in data from many sources or use the attributes that you want when you want them – unless you integrate with every party.

Decentralized identity systems are here to fix that.

As a trusted individual with a reputation guaranteed by the blockchain, you could say goodbye to waiting in lines, TSA and obtrusive checking of personal details.

4. Traveller profiles

While blockchain is very much about moving values, it’s also about handling and securing data in better ways.

In travel, user profile security and privacy have always been hot topics. When a company enters into an agreement with a travel management company (TMC), airline or other supplier, the company usually needs to give that supplier access to employee data so they are able to provide the expected service.

Whether that process is manual or automated, building a well-functioning profiling process takes time and effort and creates friction on both sides.

If employees had their information on the blockchain, this could remove much of the pain on both sides. The companies wouldn’t have to build new API connections between the supplier’s profile database and the buyer’s HR system for every new implementation. And manual profile workflows would become history.

There’d be no need for employees to create user accounts with multiple suppliers, duplicating their information along with thousands of other users on systems that stand the risk of being breached. Nor would they have to adopt every new supplier’s user interface.

Instead, there’d be just one unified profile available to those explicitly given access.

5. Settlement

Among the more obvious improvements we will see from the blockchain is the ability to move money faster.

Many fintech innovations – the removal of middlemen and their fees, money transfers in real-time, instant settlement, streamlined and continuous auditing – will benefit the travel industry as well.

6. Loyalty

By now we’ve probably all heard about the promises of interoperable loyalty programs: instant credit, exchanging points, transferring points between friends, receiving personal promotions, converting points into cryptocurrency.

But what about buying a flight ticket with points that you earned from flying with a competing airline?

When traveling, I’m not a very loyal person. I just want to enjoy the best offers I can at any time so this setup is perfect for me and multiple other travellers that aren’t loyal to one airline.

But could this become a predicament for the loyalty program owners? Maybe. But we might also see models emerge where participating businesses unite forces to meet these traveler expectations.

7. Policy and compliance

TMCs today have a role as the gatekeeper, there to help corporates stay compliant.

But what if blockchain could take over this responsibility?

Imagine the company travel manager receiving real-time alerts for policy breaches that are about to happen. Whenever an employee is trying to book a trip outside the correct channel, a direct two-way communication channel is set up between the travel manager and the, knowingly or not, disloyal employee.

Or perhaps we’ll see a paradigm shift in managed travel and booking behaviour.

Remember open booking? Perhaps the blockchain with its potential for unmatched transparency, security and privacy will be the enabler of this promised model for the future of managed travel. Book where you want as long as it’s within policy. Your travel data still gets collected, consolidated and made available to you, instantly.

8. Duty of care

With blockchain, it’s easy to foresee how risk management systems could be granted access to a traveler’s location at any time.

The travel manager, looking at the map of her employees’ whereabouts, would see this update whenever a new reservation gets created, modified or cancelled, plus when a traveller boards the plane, checks in at the hotel or starts the rental car. Or perhaps the system doesn’t use reservation details for traveller tracking, but instead receives real-time updates from an IoT-enabled device.

Health records stored on the blockchain network could also aid a traveller in need of medical help.

9. Smart contracts

Smart contract transactions are executed in autonomous software code, not law.

If we look at a legal contract or a business agreement, it’s basically the same as code – a series of if-then statements.

For example:

Hotel A enters an agreement with TMC B with a clause saying that for the next six months, room nights booked more than seven days in advance will give a higher commission than those booked later. With today’s model, both parties would sign a contract. When the period ends, both the TMC and hotel might have to run reports to identify the total number of online bookings from the TMC, or they use some commission consolidation service to document it for them.

Eventually, the correct commission amount gets paid out, although this takes time and effort, plus there might be middlemen involved in the process taking their piece of the pie.

What if all that was programmed into a smart contract?

There are obviously many benefits to this, including cost savings with the removal of intermediaries (lawyers, notaries, brokers, etc), time savings from cutting down business processes and the trust achieved from storing documents encrypted on a shared ledger.

For now, it helps knowing how to code if you want to build smart contracts, but there are currently visual editors that help write and deploy smart contracts for you. Eventually tools will come that enable any business role to create smart contracts.

10. Removing silos

Will we see a predominance of permissioned and private blockchains in our industry as the big incumbents try to evolve and maintain their power?  We’re already good at closed ecosystems, so this could be the next natural step in that direction.

On the other hand, perhaps the very nature of the blockchain – the more open and public you keep it, the faster more nodes can connect to it, and the bigger, stronger and more secure your network gets – could actually be what this industry needs to really disrupt itself?

There are initiatives that seek to enable connectivity between different blockchains, building an ‘internet of blockchains’, if you will, so there’s hope of seeing large-scale systems that open up for collaboration even if the industry should go down the route of private networks.

However, both public and private blockchains have advantages in the travel industry.

The established public blockchains, such as bitcoin and ethereum, have an advantage in scale both of payments and the applications that can be built on them, compared to the newer alternatives. Newer and smaller blockchains, on the other hand, will have an easier task achieving the network-wide consensus required to make strategic changes to the protocol.

I’m hoping, although I’m not yet fully convinced, that blockchain will revolutionize the travel industry. After all, we’re talking about an industry where fax is an indispensable part of many business processes and where 40-year old tech dominates distribution.

Lost luggage via Shutterstock

Disclaimer: The views expressed in this article are those of the author and do not necessarily represent the views of, and should not be attributed to, CoinDesk.

AirlinesTravel

Leave a Reply

Your email address will not be published. Required fields are marked *