Insight: will blockchain transform the travel industry?

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By: RickFerguson |

Posted on January 13, 2017

Insight: will blockchain transform the travel industry? Over at, commentator Kristian Gjerding argues that properly-applied blockchain technology could result in a revolution in the consumer travel experience, with airlines able to provide a single, secure, and fraud-proof identifier for every airline passenger - and provide more secure and frictionless loyalty program experiences to boot. Will blockchain lead to travel utopia? Or is the hype machine merely in full steam?   By Rick Ferguson   On the operational side, Gjerding envisions a future in which the blockchain provides a unique, secure, and insantly-verifiable traveler ID for every airline passenger that can be used to identify flyers at check-in, at security and customs, and even to make in-flight purchases via a mobile wallet. Gjerding notes that airlines and governmental organizations are already investing in the idea of a universally-accepted blockchain ID, with the International Air Transport Association and the U.S. Department of Homeland Security among the organizations leading the way.   The resulting unique and universally-accepted identifier, Gjerding argues, would make the travel experience more seamless and pleasurable for passengers. As for blockchain's usefulness as a payments and loyalty identifier, here's the money quote:  

Loyalty programs: Blockchain technology could help streamline and verify the earn-and-redeem processes involved with the points and miles in airline and travel loyalty programs. Blockchain could make it easier for passengers to authenticate and use their hard-earned miles and points, while protecting airlines and loyalty programs from fraudulent manipulation, hacking, cybersecurity threats, theft and other forms of loyalty program fraud.Payments: Blockchain capabilities also can be integrated into airline and travel e-commerce orchestration platforms—the same platforms that make it easy for airlines to add, remove and update payment service providers, digital wallet solutions and payment acquirers. Any process that simplifies the complexity of the always-changing mobile payments ecosystem can shorten time to market for products, speed deployment and reduce the workload on I.T. and technical staffs.Payments Fraud: The blockchain process, which is built on collective verification, transparency and speed, removes many of the incentives and opportunities for hacking. In and of itself, blockchain could help reduce much of the payments fraud, hacking and identity theft that currently occurs with vulnerable commercial transactions.

There are, of course, naysayers to the technological utopia oft envisioned by blockchain evangelists. One of the more salient arguments is that blockchain advocates often underestimate the necessity of human intervention in the process; for example, Gjerding's assumption that benevolent blockchain miners will authenticate every traveler ID and transaction is a mighty big one - and where is the guarantee that such a system would automatically result in lower costs and less friction? Another argument holds that blockchain advocates assume that blockchain will result in lower costs for businesses, whether that cost is associated with identifying customer transactions, providing secure mobile payments, or enabling loyalty programs. History does not, however, provide much comfort that these lower costs will prove out.   Take, for example, the rise of "Over the Top" (OTT) television in the US, exemplified by streaming services such as Amazon, Netflix, Hulu, Evangelists predicted that the rise of these services would end the era of Big Cable and send an entire generation of Millennials cutting the cord to enjoy their favorite programs al a carte' and at a much lower cost than traditional cable. Comcast, Time Warner and their ilk would soon go the way of the dinosaurs, undone by their own cumbersome, expensive business model.   Only that isn't what happened. OTT providers charge what the market will bear - and what the market will bear is what most consumers are already willing to pay for traditional cable TV. The result is that cutting the cord and receiving anywhere near the quality and variety of programming provided by legacy cable operators requires you to sign up for multiple streaming services that collectively cost just as much as cable TV. The result: massively increased friction, fewer viewing options, and no real cost savings. In this case, OTT technology has thus far failed to realize the low-cost viewing utopia its advocates envisioned.   That's not to say blockchain won't prove to provide everything its advocates say it will. It's merely to say that promises of technological utopia often fail to materialize. Blockchain will certainly play a role in consumer interactions - but it may very well result in systems that work less well, and cost more, than its proponents envision.   That said, if blochain can guarantee my upgrade to Business Class and make a decent Bloody Mary, then I'm all in. Bring on the blockchain utopia.   Rick Ferguson is CEO and Editor in Chief of the Wise Marketer Group.