Blockchain of the group of airlines could bring the distribution system to a step back – Skift

These are the first times, but the new experimental blockchain of Airlines Reporting Corp., owned by the airline, and others similar, could lead to efficiencies for corporate travelers, but also – and above all – distribution alternatives to the overcoming of the global distribution.

We are very clear: a potential bypass of distribution incumbents will not happen soon. The death of global distribution systems such as Saber, Amadeus and Travelport has been prematurely anticipated over the last 20 years. They are an integral part of travel commerce on a global, online and offline basis, and are not going anywhere anytime soon despite intermittent interruptions.

The US airline Reporting Corp., or ARC, as it is more commonly known, announced this week that it had fielded a demonstration of private blockchain with United Airlines and Blockskye, provider of blockchain solutions. Through the blockchain, using the ethereum technology, ARC and United have reported and cleared United Airlines ticket transactions. ARC offers settlement services for ticket transactions between airlines and travel agencies and travel management companies.

Traditionally, according to Dickie Oliver, ARC vice president and chief information officer, the organization uses relational databases that connect to front-end applications to regulate transactions, including ticket changes, and then ARC sends reports to clients. or exchange of information through API (Application Programmable Interfaces).

Blockchain is oriented to simplify and democratize the process.

"We provide a ledger-based solution that guarantees the highest level of data quality since nothing is applied to the blockchain unless everyone in the chain agrees that a new transaction is legitimate," said Oliver. "Our customers will have immediate access to blockchain transactions and will be able to work with those transactions through their systems."

Oliver said that the blockchain could theoretically provide travel agencies, both business and leisure, with faster access to higher quality data "where it is guaranteed that the agency and the airline are looking exactly the same data".

Jeff Christensen, managing director of distribution and ancillary prices at United Airlines, said that demonstrating the concept, if implemented on a large scale, could save business travelers time when collecting receipts for expense reports that can be more productive.

But Oliver of ARC said that in addition to providing airlines and travel agents with access to higher quality data, "we believe that airlines will have access to more efficient and cost-effective distribution alternatives that will be advantageous. also for corporate clients: the use of smart contracts on the blockchain will also drastically reduce the reconciliation efforts that exist today between all parties ".

Many sectors of the travel industry are trying to block in order to gain an advantage in distribution. Airlines such as Lufthansa, global distribution systems, including Travelport, and the TUI Group tour operator, all hope the blockchain can simplify or bring efficiency in travel distribution.

The CEO of the TUI Group Fritz Joussen, for example, blew up in 2017, when he said that the blockchain "takes away the monopoly of knowledge from a few platforms".

Joussen was referring to the potential – not very proven – that the blockchain could affect the grip of online airline distribution from Expedia to Booking.com and Airbnb.

Obviously, companies that test blockchain will have to demonstrate that there is a business case for its use and that this will lead to financial benefits. If it costs more to a task using a blockchain than through traditional means, then it makes no sense to invest in new technology, for example.

Potential impact

So what would be the potential impact of the ARC blockchain – or similar initiatives – if it eventually went into production.

"If ARC manages to record and regulate transactions using blockchain in the future, it would be faster, safer and more efficient," said the American Society of Travel Advisors. "This would apply to all agencies of all shapes and sizes using ARC payment and payment products."

Whether it is a home-based agent selling luxury vacations or a large travel management company, the travel advisor expert group noted that agents or business travelers will not be able to see that the transaction is solved by blockchain or traditional means.

But hopefully, they will benefit from speed, accuracy and other efficiencies.

Denise Jackson, CEO of Balboa Travel Management, based in San Diego, said that the blockchain partnership between ARC and United "represents a good step forward".

"It should enable a more secure and efficient process for the airline and ARC in general," Jackson said. "Given that data is protected and that the liquidation process is theoretically more productive, it should benefit us all in the long run."

Marc Casto, CEO of Casto Travel, spoke about the potential and challenges of the blockchain concept.

"Speaking only of the concept, it seems a very promising development to bring the world of intelligent procurement to the purchase of airline tickets," said Casto. "The use of blockchain for air travel has many critical obstacles to overcome, including the adoption by both airlines and ARC is at the top of the list, I am encouraged that both United and ARC are available to consider this alternative solution, in particular that which could greatly reduce fraud, promote ancillary sales and reduce settlement costs. "

However, the challenges seem daunting.

"With that said, one of the key concerns with blockchain will be speed and timeliness for transactions," said Casto. "The current volume of air tickets processed minute by minute would destroy the processing capabilities of any existing blockchain system, of course, this is still a lot in its infancy and future efficiencies can be expected."

ARC said that if the pilot proves to be effective, he will extend participation in other airlines. The next phase of his test would also bring corporate travel agencies into the loop, ARC said.

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