Blockchain technology: how it improves efficiency of travel industry

Blockchain technology has the potential to shake up the travel industry by giving airlines and hotels a way to bypass controlling intermediaries like Expedia or Amadeus and gain better access to customer data, Reuters reported.

The global blockchain market is expected to reach $4.401 billion by 2022 — growing at a compound annual growth rate of 71.46 percent during the forecast period, as per a report from Research and Markets.
Major players including Lufthansa and citizenM hotels are partnering with start-ups and talking to large corporate clients about whether they can do group bookings via blockchain instead of using middlemen, who charge up to 25 percent of ticket or room prices in fees.

Blockchain, which functions as an online record-keeping system maintained by a group of peers rather than a central agency or authority, offers new business opportunities in tracking bags and flight delays.

Blockchain offers an opportunity to build new platforms that can connect travel providers and customers more directly and replace decades-old technology.

“We see a lot of business potential from the very nature of blockchain being decentralized by construction, removing the middleman by design. That looks very fruitful potentially,” said Xavier Lagardere, head of distribution at Lufthansa Group Hub Airlines.

The travel industry joins financial, mining, energy trading firms and others in looking at the potential for blockchain technology when it comes to simplifying processes, cutting out middlemen or tracking goods.

Swiss non-profit Winding Tree, a travel blockchain company, has partnered with players including Lufthansa, Air New Zealand and Netherlands-based citizenM hotels. It allows airlines and hotels to publish available inventory to customers without needing systems that aggregate data on flights and rooms, and could allow them to avoid the fees they currently pay for the use of such systems.

Currently such systems are provided by intermediaries like global distribution systems (GDS) providers Sabre, Amadeus, and Travelport, whose real-time inventory technology is used by travel agents or corporate travel bookers, or consumer-facing online travel agencies (OTA) like Booking Holdings and Expedia Group.

Reducing commission fees, which can reach up to 25 percent of the price of a hotel room for example, is an ongoing battle, as is access to customer data, with some airlines complaining that they don’t get passenger contact details from third parties, crucial when delays occur.

Hotels group Marriott is looking to lower the commission it pays to online travel agencies, starting with Expedia.

Lufthansa in 2015 introduced a fee for bookings made via GDS companies, of 16 euros, and its rivals IAG and Air France-KLM have also renegotiated contracts.

Ctrip, China’s online travel company, is looking into blockchain itself.

“Right now, retrieving blockchain codes takes a long time, so the efficiency needs to be increased and the cost needs to go down,” Ctrip CEO Jane Jie Sun said. CEO Gillian Tans said blockchain could make it easier for the company to connect to properties and attractions.

Air transport technology specialist SITA worked with Heathrow Airport and British Airways owner IAG to test whether blockchain could be used for sharing of flight data and to keep passengers updated.

Kevin O’Sullivan, lead engineer at SITA Lab, said it was hard to nail down what the status of a flight was when you have two airports and one airline involved in any individual flight, each with its own operating database.

Sara Pavan, head of Amadeus Innovation Partnership, said baggage tracking, loyalty programs, passenger identification and cross-border payments were all areas where blockchain could prove useful.

Airlines association IATA is testing blockchain for payments via its billing system that connects airlines and ticket agents, and says it could be cheaper than payment solutions offered by PayPal, for example.

Related News

Latest News

Latest News