blockchain
Andy Bell

Avoiding the hype to see the value of blockchain for travel

May 16, 2018

At Travelport, our architects have been investigating the implications of Blockchain, both for our business and for the wider travel sector. The 2017 Gartner Hype Cycle for Emerging Technologies categorized blockchain, alongside AI and Augmented Reality, as being in the ‘Peak of Inflated Expectations’, with the main utilization for blockchain so far being in cryptocurrency and the greatest input to blockchain developments coming from start-up organizations. December 2017 was a key moment for bitcoin, when trading in the cryptocurrency on a public index began. The high level of volatility of bitcoin has meant it hasn’t been far from the headlines. So how do businesses like ours see through the hype around blockchains to uncover the real value of this type of technology for travel?

In the simplest terms, a blockchain facilitates secure online transactions. It represents a fundamental move away from ‘owned’ applications located in a datacenter or on ‘cloud’, to true distributed computing power in the hands of the participants of the network. It is seen as a disruptor technology, and has potential far beyond cryptocurrency, as it can be used to create a trust model built around any recordable asset, transaction or contract.

There are many potential applications for Blockchain in the travel industry. These range from the guarantee and distribution of contracts, to payments, traveler identity and ticketing. Each application requires investment and collaboration across partner organizations for it to be successful. In an industry which is already built on trust, where strong relationships exist and which is working well to manage complexities, at Travelport we started with an important question: Is there a role for blockchain?

Travelport recognizes that blockchain and distributed ledger technology is an important future trend for many travel suppliers and consumers at the moment. In response to this, in mid-2017 we launched a technology innovation study into blockchain and distributed ledger and defined two proofs of concept.  So far, we’ve been analyzing the suitability of blockchain to manage on-boarding and management of travel content for secure distribution and selling. The next stage will be to develop a proof of concept further with selected travel and technology partners.

We have also been considering the other potential use cases for blockchain and distributed ledger technology in our sector and which may be the next target for pilots. These use cases cover different aspects of the travel process from holding inventory or guaranteeing a reservation to making payments. Here is our analysis:

 

Use case

Suitability for blockchain or distributed ledger and limitations

Whole trip, travel reservations

Currently not suitable for public blockchains, scalability and speed of transaction verification are limiting factors.

Traveller identity

Suitable for blockchain or distributed ledger, needs robust access control mechanism and security model

Payments for travel transactions

Suitable for blockchain, requires financial partners and requires currency stability

Loyalty federation

Possibly suitable for blockchain, requires collaboration of travel suppliers and agreement on exchange mechanism

Guarantee of bookings and payment

Validating a booking on distributed ledger, suitable for blockchain as it does not involve keeping the whole reservation on the ledger

Ticketing

Similar to above but risks transposing legacy process to distributed ledger technology

B2B Settlement

Suitable for distributed ledger in a closed business network

Shopping and inventory

Inventory control possible with distributed ledger but probably only within a limited access group or closed network due to performance and scalability

Travel exchange

Travel token or currency exchange capability, working across supplier’s ledgers. Will probably be a necessity to support some of the other models.

 

Travelport predicts that in the short term most blockchain developments will happen in closed supplier groups on private and permissioned chains within the travel industry. In the mid to long term we may see payments, inventory and order management disrupted by blockchain or distributed ledger technologies. Whole trip management on blockchain, air settlement and combining of air supplier journeys we see as a longer-term opportunity, anticipating further evolution within blockchain technology. The evolution of open standards around travel blockchains and the willingness of travel suppliers to offer or sell content on a distributed ledger will drive advancements in these areas.

The real impact of blockchain and distributed ledger technologies will be a reduction in processing times and efficiency improvements for any process where multiple parties must share and agree the same information. Examples include invoicing, settlement, moving of payments, contract negotiation and identity verification. Travelport customers currently undertake many of these activities using manual processes with multiple checks and verification steps. A distributed ledger secured by blockchain would ensure that all parties agree on a single version of the truth in real time cutting out many of the existing processes.

 

Short Term

Mid-term

Long term

 

1-2 years

2-5 years

5 years +

 

Limited B2B payments

Travel cryptocurrency exchanges

IATA coin for air settlement

Travel cryptocurrency/token offerings

Reservations on distributed private ledger

Whole trip on blockchain

Basic traveler identity

Cryptocurrency payments for travel

Interlining across blockchains

Private permissioned distributed ledger for supplier inventory

Early IATA Coin adoption for air payments and settlement

Global traveler identity

 

Traveler identity shared across suppliers

 

 

 

 

 

        

Travelport is actively seeking other travel industry partners who are interested in exploiting blockchain and distributed ledger technology.

For more information, follow this link to read Travelport’s technical report on blockchain in the travel industry.