In 48 BCE, the historic city of Alexandria was destroyed by Caesar’s army, including its world-famous library. Today, if a library was destroyed, its records would live on in other libraries and on the internet.
This is the inherent power of a decentralized database - and of blockchain.
Although still in its infancy with few real-world activations, the potential for blockchain technology to disrupt tech-based industries is enormous.
The travel industry is ripe for a shake-up, and at Amadeus, our blockchain research and development is assessing the technology's potential applications across the industry.
Our blockchain efforts are focused on a few key areas: traveler verification, loyalty interoperability, payments and baggage tracking.
With focused experimentation in these areas, as the technology progresses and matures we will be able to understand all of its properties and applications as a whole.
Identity verification
The highly trustworthy and immutable nature of blockchain makes it ideal for improving the way travelers are identified during their journey.
Traveler IDs are required at booking, when changing a booking, at security, the boarding gate, duty-free shopping and the hotel.
Imagine how much easier travel would be if you didn’t need to use a passport at all these points in the journey. It is possible blockchain can deliver a much more frictionless experience for proving a traveler’s identity.
Loyalty
Today, travelers are often members of various loyalty programs with disparate points. But imagine if you could store all your loyalty points in a single digital wallet and redeem them easily while also sending or sharing points with friends via an app.
By improving the underlying interoperability of disparate loyalty programs in an automated and real-time way, blockchain means points can be much more universal, like cash is today.
Payments
Many areas of the industry rely on settlements between parties. Consider a hotel booking where an aggregator, OTA and the hotel need to settle cash and commissions based on pre-defined agreements.
Today this is an extremely complex process, and the introduction of smart contracts could automate settlements in many areas of the industry.
Baggage tracking
Baggage tracking is another complex challenge involving multiple actors (airlines, ground handlers and airports). Blockchain could facilitate the exchange of baggage information among those players, ensuring a transparent communication in case of mishandled luggage.
Consider how much reassurance you’d have as a traveler with a single view of where your bag is, perhaps available via a mobile app.
Hopefully, these are just a few of the ways we can use blockchain to move travel tech to the next level.
What about distribution?
Right now, we are working on few travel related prototypes. With a technology this exciting, experimentation doesn’t stop in the lab. A hands-on approach with innovative partners helps to truly assess the opportunities of blockchain.
From working with major IT giants like Accenture to ambitious new start-ups, Amadeus’ vision for blockchain is one of excitement and hunger for the future.
You might be thinking, “But Sara, Amadeus is a distributor! Aren’t you skipping over the potential for blockchain in distribution services?”
Technology is not the only component of a successful distribution strategy. The strength of the distribution services that Amadeus provides for airlines, travel agencies and travelers does not just come from our backroom tech.
“Distribution” includes the services, workflow and integration provided with that technology - making sure everything works well together for everyone.
Challenges
Moreover, there are some limitations blockchain will need to overcome before it becomes a viable form of distribution.
Scalability is a major concern: most existing blockchains (Bitcoin, Ethereum, etc.) have significant scalability challenges. For example, the Bitcoin network can only process about 7% per second. In comparison, Amadeus processes 100,000 end-user transactions per second in peak times.
Transaction cost will be another issue to consider. Blockchains typically require a lot of computing resources given that data is held multiple times and there is significant cryptographic computation to be undertaken.
In systems like Bitcoin and Ethereum, this means there is often a prohibitive fee associated with each transaction, which can represent several percentages of the value being exchanged, making them inappropriate for many use cases.
Finally, integration with existing systems will be another major hurdle. Today it is hard to make blockchain interoperable with existing IT systems.
If a hotel booking is made on a blockchain system, how will it integrate with a system that isn’t on blockchain?
Promise for the future
While new technologies generally go hand in hand with efficiency, our duty to travelers is creating an experience of consistency, transparency and choice.
Amadeus is confident that indirect distribution is the most cost-efficient solution for all parties to achieve that aim on a global scale.
Blockchain is still in its infancy, but the promise of a new method of storing data that is secure, immutable and decentralized is an intriguing one.
We’ve seen blockchain success in Bitcoin and Ethereum trading, and as our research progresses we hope to see similar leaps in the travel industry - making everything from flights to cruises easier and more exciting for travelers.