The promised world of blockchain

Among the alphabet of new technologies emerging to change our lives, blockchain might turn out to be the most important. But it’s probably the least understood. So what makes the potential of blockchain so exciting?

Blockchain. Never mind the hype, what exactly might we in the air transport industry expect to gain from this much touted emerging technology? 

The answer lies in ‘trust’. Blockchain, which is rapidly becoming superseded by the term ‘Distributed Ledger Technology’ (DLT), is all about trust.  

Put simply, blockchain, or DLT, is a ledger of digital events than can be replicated, shared and trusted without the need for central authority. Its characteristics are resiliency, disintermediation, and traceability, as well as the fact it’s tamper proof.

Blockchain made simple

In discussions with border agencies, industry bodies and customers, SITA experts have conceptually broken down the key elements of blockchain into: a distributed ledger of events, digital signatures and hashing.

Put simply, the ‘block’ part of blockchain is just another term for what would otherwise be a record or ledger item. It holds the details of the transaction. But the block also contains two extra pieces of information.

First, the transaction is wrapped in a digital signature – one of those long strings of characters and numbers created from hashing (or more formally, an algorithmic method for transmitting and encrypting data). This is unique to the block and requires the digital key to decipher.

Second, the block includes the digital signature of the previous block. This is an intrinsic part of each block and provides the backward link to earlier transactions.

The effect is that all the blocks are strung together into a chain that cannot be decoupled. Existing blocks cannot be altered, only new ones added.

Why it's unique

Decentralization gives blockchain its power. While the use of digital certificates secures the contents and order of the blocks, it’s the way a blockchain is stored is that makes it unique. 

Generally, critical transaction data is stored in a central database, located in a data center. It’s owned by a single organization which has responsibility for ensuring its security.

As a result, the database will be heavily protected, both physically and digitally. That’s expensive and may still fail from time to time. And when it does, there’s no access to the data.

A blockchain takes a different approach. The blockchain isn’t located on one large computer, but on many computers, and every computer is directly in contact with all the other computers in the blockchain network.

Each one has a copy of the entire blockchain and continually synchronizes their copy of the chain with those held by others.

Why it's clever

Here’s the clever part. In the event of inconsistencies between the copies, the majority version is accepted as being the ‘truth’ and the minority versions discarded and replaced with the majority version.

This means errors or failure of an individual copy of the blockchain has no impact. It also means manipulation by a person is close to impossible, because 51% of the computers on the network would need to be compromised simultaneously. 

It's not 'the thing'

The real ‘so what’ is this: DLT is a new way for business to engage in the trade of products, services and information without the friction associated with establishing trust between parties.

“With the help of automation, the Internet of Things, artificial intelligence and robotics, DLT promises a world where business can quickly contract, exchange services, record transactions, manage payment and disengage,” says Kevin O’Sullivan of the SITA Lab, SITA’s technology research team.

“DLT is important because it’s a business model paradigm shift. It’s disruptive because it provides trust and transparency in information exchanged between businesses.”

As has been said before, “DLT is not the thing … it’s simply the thing which enables the thing.”

New models

With DLT, by checking the blockchain and confirming transactions, the entire system is effectively transparent and self-regulated, with no central authority needed to manage the data. In turn, this reduces the need for transaction or management fees for third parties.

“This has the potential to reduce operational, governance and regulatory overheads for existing business practices and to create new business models where the complexity of sharing data in a trusted environment is prohibitive,” says O’Sullivan.

Take a simple banking transaction between two parties, such as the transfer of money. Both parties would involve their banks, plus the banks would use the services of a third organization, normally a clearing house like SWIFT, to perform the transfer. All three agents in the process would charge a fee and add time to the process.

Similarly, with property transfers there’s a Land Registry-type agency sitting in the middle recording and facilitating the transaction – at a cost.

Open, visible

However, the open, visible nature of DLT means that anyone with access to a copy can see and check every transaction. The need for intermediaries disappears. Which is why the technology is being hailed as a powerful tool for efficiency.

“Think of the streamlining of process overheads where companies find suppliers, add them to their billing systems, define the terms of engagement, track the supply of services, manage the billing and so on,” adds O’Sullivan.

Interest

With DLT considered more robust and secure than the traditional setup, major companies around the world are taking an interest in the technology. This is giving rise to an emerging blockchain ecosystem with venture capital backed start-ups finding new uses for the cutting-edge technology.

Even today, more than 20 financial institutions, including heavyweights JP Morgan and Goldman Sachs, are working to create a DLT-based prototype network that can be used to transfer funds between branches in a much faster and economical way than the existing SWIFT network.

Travel impact

By 2020, we are going to see many industry verticals, including airlines, delivering high value to both themselves and their ecosystem of partners and suppliers using blockchain technology.

Casey Kuhlman, CEO, Monax

 

Signs that this emerging technology is set to impact the travel industry are starting to appear. One company involved closely with the funds transfer project is Monax. CEO Casey Kuhlman who presented at the last SITA Innovation Day is resolute in his belief that blockchain is going to fundamentally change processes, including air travel within the next five years.

“By 2020, we are going to see many industry verticals, including airlines, delivering high value to both themselves and their ecosystem of partners and suppliers using blockchain technology,” he says.

Another SITA Innovation Day company, New York-based Loyyal, is using DLT to personalize and aggregate loyalty programs. It’s developed a platform that makes it easy and safe for multiple programs to unite under a single banner scheme. See ‘Reach for the stratosphere’.

Single token

In the meantime, the SITA Lab is evaluating DLT for different use cases within air transport. One of the most revolutionary is to make it the basis for virtual or digital passports in the form of a single secure token on mobile and wearable devices.

Potentially this could reduce complexity, cost and liability, around document checks during the passenger journey. Already trials are underway at a selection of major airports.

Leading the Single Travel Token program is Sherry Stein, SITA Lab Senior Project Manager. “The combination of blockchain, mobile technologies and biometrics offers unique possibilities that simply didn’t exist before,” she says.

“With blockchain technology, for example, travelers need only be identified once at the start of the journey, be it at an airport kiosk or the bag-drop.

“This could eliminate the need for multiple travel documents without passengers having to share their personal data.” See ‘Stepping towards single token travel’. Also see ‘The advent of the token’ in our last issue.

The future

The reality is, though, that DLT is not a mature technology. The general perception is that it’s three to five years from maturity. Given that lack of maturity, the space is dominated by start-ups.

“SITA is actively engaging with multiple DLT start-ups and other vendors and industry players to actively keep an eye on the potential, and to evaluate other use cases and developments specifically for the air transport industry,” says O’Sullivan.

“There’s also a real need for the industry to take the right approach, to ensure governance, standards, compliance, security and more – which is an area we’re watching keenly.”

Given that such an approach is taken, then due to the nature of the air transport industry there are a multitude of opportunities to streamline current processes and improve interoperability of government agencies, industry providers, regulators airports and airlines.

“This includes potential usage for baggage tracking, cargo manifests, aircraft history and maintenance, and a lot more,” according to O’Sullivan.

DLT’s ability to ensure trust and security make it perfectly suited to highly interactive environments with multiple suppliers offering multiple services, such as for baggage, check-in, re-fueling, cleaning, de-icing and many other processes at airports.

“With many airlines and airports consuming these services, the scenario involves a complex set of multiple business contracts, which plays to DLT’s unique strengths,” concludes O’Sullivan.

Stepping towards single token travel

SITA is leading the way forward in stepping towards single token travel using e-passports through the development of SITA Smart Path™.

Bringing blockchain capabilities to bear, the solution captures a passenger’s biometric details with a facial scan during an enrolment process at a kiosk or bag drop, whichever is the first touch point in the journey.

Once checked against the passenger’s travel documents, a secure single token is created and stored in a secure biometric database within the airport. It’s then used at every interaction through the airport, for the duration of the passenger’s journey, after which all biometric is deleted.

Major token trials

Already several single token travel trials are well underway with SITA, including a major airport – one of the world’s fastest-growing – in the Middle East, as well as in Asia Pacific.

One of the latest trials to be announced is at Brisbane Airport, in partnership with SITA and Air New Zealand, with plans to expand the service to more international airlines in the coming months.

Based on the trials, SITA Lab is now looking into the next generation of token, a reusable global travel token, for use at every airport during a trip. This would mean that passengers only have to enroll once with the service to have their biometric, biographic and itinerary data captured and a token created.

Learn about SITA Smart Path™

April 2017