The pandemic has led to panic in the airline industry, with countries closing borders, passengers preferring to defer all travel and profits plunging steeply across the airline ecosystem. It will take until 2024 for international air travel across the Asia-Pacific to reach pre-virus levels, according to IATA (International Air Transport Association).
Given that inertia in the industry, is there any innovation to look forward to? Yes. One of the region’s leading airlines embarked on a unique, blockchain-based project to revamp its frequent flier system as a pilot before rolling it out to other business units (BUs).
Blockchain, based on the distributed ledger technology, allows organizations to streamline shared work streams – such as supply chains, logistics, and multi-modal warehouse management – by exchanging and tracking assets and transactions on a shared ledger. Blockchain is a transparent and verifiable system. As a shared, secure ledger of transactions distributed among a network of computers, blockchain limits waste, reduces the risk of fraud and enables the creation of new revenue streams.
Tech & Talent
“We wanted to try out this new tech, initially with our frequent flier program, which has a few hundred thousand customers across multiple tiers,” the airline’s CTO (Chief Technology Officer) said. “Since we were on the Microsoft platform, we wanted to work with a partner with proven expertise on Azure and blockchain technology. We went through the trough of vendors and zeroed in on CK (Cloud Kinetics).”
In enterprise use, blockchain networks are often distributed among a group of partners (called a consortium), giving each partner real-time visibility into every transaction. Each partner also can reject incorrect transactions before they’re applied to the ledger, which simplifies auditing and dramatically reduces the risk of fraud.
The CK team went through the requirements and complexities. “We proposed a scalable blockchain model based on the utilization and consumption of resources,” Mr Karthik Santhanam, CK’s co-founder, said. “We have been working with this airline since 2018. We knew how their BUs worked and the level of precision they wanted in the solution.”
CK chose ACL (Azure Confidential Ledger), a distributed ledger but one where the business logic is not centrally controlled. ACL uses Azure confidential computing capabilities, running on hardware-backed secure enclaves. It provides tamperproof data storage in scenarios where critical metadata records must not be modified, including in perpetuity for regulatory compliance and archival purposes.
“We found the Ethereum-based blockchain on Azure as the ideal platform for this,” Mr Santhanam said. “We proposed a custom development keeping the airline’s objectives in mind. We worked initially with Microsoft to build the development and quality assurance environment, then with the airline to move the system into production and offer our suite of managed services.”
Innovation & Outcome
The outcome? “The solution worked like a charm,” the airline CTO said. “It was well integrated with production. We could scale it with multiple BUs in due course. We were glad that CK provided systems operations and support as well. Moreover, CK had to align with our IT governance and service delivery model for seamless integration.”
The result? “CK won Microsoft’s Innovative Partner of the Year award,” Mr Santhanam said. “The airline had other partners for other projects. But for this project based on Azure blockchain, CK was the only vendor. We also provided support for development, systems operations, and maintenance.”
New tech may help airlines bounce back from the pandemic once the recovery phase kicks in. “While curbs are easing, a full return to normal operations is a long way off,” Reuters reported on Oct 13, 2021. “IATA estimates global aviation industry losses from the pandemic will be a towering US$200 billion for 2020-2022. Losses in Asia alone were close to US$50 billion in 2020. International travel in the Asia-Pacific region was at around 4% of 2019 levels in August 2021.”
As a footnote, Azure Blockchain Service was retired on Sept 10, 2021. “Customers are recommended to use ConsenSys’ QBS (Quorum Blockchain Service) as a direct replacement, which offers expanded features and flexible deployment options for managed blockchain networks,” Microsoft reported. “QBS is a managed service built on technology acquired from JP Morgan Chase. It automates the deployment and management of a cloud-based blockchain network. It is a fully managed ledger service that gives enterprises the ability to operate blockchain networks at scale.”