Could it really impact the travel industry?
Blockchain is often discussed in the context of the financial services industry, such as banks.
This is because they are a widely used intermediary service, with identifiable problems, that have the potential to be solved through peer-to-peer value exchange.
You may have heard of Bitcoin, the digital currency that allows real-time worldwide transactions to occur without the use of a bank.
However, the reality is that blockchain has the power to make all intermediary services redundant.
Although this is a scary thought for the travel industry, it also provides an opportunity to utilise this new technology to create developments and add value to the service customers receive.
How will the technology affect TMCs?
Imagine if you could access all your loyalty rewards programs, across different companies and industries, in one digital wallet. Envisage being credited your reward points in real time and being able to redeem them immediately, or transfer them to a friend. Finally, imagine receiving promotions only personally relevant to you.
While the user experience of loyalty programs running on a blockchain will probably be like nothing we have seen before, interoperability between different loyalty programs isn’t new or a game changer in itself.
However, running a loyalty program today is expensive and the business value lies in the cost-efficient collaboration that the blockchain enables between programs. Making loyalty programs capable of interacting with each other will become easier, cheaper and more secure.
One of the most notable blockchain loyalty programs is Loyyal, which aims to unite existing schemes and create co branded rewards in one app. For example, if you were to travel to Dubai, you could earn points while visiting museums and other attractions, which could then be spent with various partners.
The traveller experience:
Air travel insurance
Earlier we introduced Bitcoin, a digital currency. Similarly to Bitcoin, Ethereum also has a cryptocurrency called Ether that utilises a blockchain-based platform. However, Ethereum is becoming increasingly popular due to its many additional aspects, the most notable being its smart contract feature. This allows peer-to-peer contracts to be negotiated and facilitated, without risk of fraud or the cost associated with traditional contracts.
German start-up Etherisc developed an app called Flight Delay, based on Ethereum. It utilises smart contracts to ensure automatic and instant pay out, directly to your account, if your flight is delayed or cancelled. Instead of a long and difficult process, through using blockchain, Etherisc have been able to condense the process into just one second.
Similarly to Etherisc, Irish start-up Travacoin has designed a blockchain-based voucher system which simplifies the refund and compensation process for delayed and cancelled flights. In 2016, Travacoin were awarded runner-up in the Passenger Innovation Award at IATA’s World Passenger Symposium.
How will the technology affect TMCs?
We could see a revolution in the payment and settlement process offered by TMCs and airlines. Currently, there is a delay when using two central settlement systems (BSP and ARC). Instead, blockchain could enable instant payment from agents to carriers.
Whilst this seems advantageous for airlines, it could affect TMCs as they often offer buyers credit until they are required to settle.
Other parts of travel including hotels, events and ground transportation are fragmented. Using blockchain technology, there is the opportunity to consolidate settlement and commissioning processes. No parts of travel are likely to remain unaffected by the blockchain but hopefully they will see improvements, from booking, ticketing and payment, to the trip itself.