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If the concept of Blockchain and how it can be used in travel has you befuddled, spend just 10 minutes reading this post and all will become crystal clear.

That’s thanks to Amadeus Head of Innovation Partnership Program, Sara Pavan, who explained it very practically, at a webinar run by ABTA , Amadeus and FCM Travel Solutions.

If you would like to listen to the full webinar, you can access it here or if you want the quick version, you can read on:

What is Blockchain?

Blockchain is a new way of conducting digital transactions that involve value – money, goods, properties and assets.

That sounds complicated, doesn’t it? So, Sara has simplified it by using a metaphor we’ll all understand:

I’m writing a document which I want you to edit. I write it in Word and send it via email for you to edit. That’s what happens now.

But you have to wait for me to send it to you before you can change anything, and I need to wait for you to send it to me before I can see what you’ve asked me to change. We cannot both access it at the same time.

All that has changed now with Google Docs because we both have access to the same document at the same time – one version is always visible to both of us.

With Blockchain, the same thing that happens to a document in Google Docs, happens for a record or a ledger. Two or more ‘actors’ have access to the same record or ledger at the same time.

How does Blockchain work?

1. It’s a decentralised database that is shared, replicated and synchronised across a network of different users spread across multiple sites, institutions and geographies.

2. Information can be added to network, but never removed.

3. Information is controlled and validated by all participants of a network.

4. It uses cryptography to secure a transaction and the information can only be unlocked if you have a private or public key, similar to a password.

5. It’s difficult to corrupt the information because you have to convince different nodes of the network that the information is valid before they in turn endorse it.

6. All parties have to confirm whether the transaction is valid and only once it is approved by all parties in the network, is it effected.

6.Most of Blockchain’s applications run on Smart Contracts – self-executed contracts where actions are triggered based on predesigned set of rules.

How can Blockchain be used in travel?

Travel is a good candidate for Blockchain technology, explains Sara. This is because transactions and data are continuously shared among multiple actors and touchpoints where each actor would require, collect, store and share traveller and operational information, which creates a very complex web of requirements and data reconciliation on the backend that could be simplified by Blockchain technology.

Amadeus has defined four areas where Blockchain can bring considerable potential in travel. Some of the biggest gains can be achieved in areas of:

  • Baggage tracking: Sharing information among all baggage handlers simultaneously instead of one handler at a time, which is what happens now, and automating insurance pay-outs through Smart Contracts.
  • Simplifying passenger identification: Enable the traveller to store and share their identification information through a digital token that is accessible through their own mobile device.
  • Developing more user-friendly loyalty schemes: Access loyalty points in one digital wallet, which will allow you to redeem or transfer points immediately.
  • Simplifying cross-border payment process: Improve the settlement time and reduce the fees and number of actors involved by streamlining the process.

Sara suggests a few other use cases including:

  • Insurance claim automation
  • Reputation scoring
  • Hotel check-in automation

Blockchain is very promising technology with a great deal of potential, but we’re still at a very early stage, says Sara. “We’re likely to see more live pilots soon, but we will need between five and seven years to reach adoption because there are many barriers that are blocking its adoption.”

One of these is the cost of adopting Blockchain which is unclear. “We need to understand how much it will cost to adapt our current systems to make way for Blockchain. Will an API be required or do we need to build our own legacy systems from scratch? There are still lots of questions that need to be answered.”

According to Sara, for Blockchain to happen in the travel industry, there will need to be a great deal of collaboration among industry partners. “Successful adoption will require a lot of industry technology partners who understand the complex processes that underpin the travel industry to collaborate.”

FCM Travel Solutions, which has created a whitepaper on Blockchain in travel, says that they are seeing several travel players dabbling with Blockchain.

“Most recently, we’ve seen Singapore Airlines launching the world’s first Blockchain-powered loyalty programme,” says Lloyd Barkhuizen, FCM Travel Solutions Head of MEA Sales.

This will be in the form of a digital wallet app, using an SIA-owned private Blockchain involving only merchants and partners. Members will be able to use ‘digital KrisFlyer miles’ for point-of-sale transactions at participating retail merchants.

Sara concludes the webinar by highlighting the recent Amadeus whitepaper on how Blockchain can be harnessed for travel with more details on the four use cases mentioned above, which you can also download here.