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Blockchain to revolutionise the complex travel ecosystem or blockchain technology to drive efficiencies in travel companies? Now that the buzz around what blockchain can deliver for travel has eased to a hum, many firms are faced with this choice. But which is the right one?
These are issues to be discussed at upcoming EyeforTravel Europe where Winding Tree’s CEO Maksim Ismaylov will be speaking. Winding Tree, which raised $16m in an initial coin offering in February, is the company with the biggest idea - to disintermediate the highly fragmented online travel jungle using what is still a nascent technology.
With some big name backers including Lufthansa, Air New Zealand and Nordic Choice Hotels, the firm has certainly piqued interest. However, as a recent Q1 roundup, penned by Augusto Lemble, one of the company’s seven developers, cautiously acknowledges: “There is a long road ahead to build the decentralized open-source autonomous platform that the travel industry is waiting [for] and needs”.
Jörg Esser, a theoretical physicist and RolandBerger consultant, who will be looking at blockchain use cases in an EyeforTravel Europe workshop, says: “There is no doubt that blockchain and decentralised ledger technology holds the potential to clean up the travel industry’s complex jungle of multiple distribution channels.”
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However, while Winding Tree seems to have the potential to be one of the key players in kicking this off, many, including Esser, believe that the early benefits of blockchain technology are likely to be in creating intra- or inter-company efficiencies.
In other words, private blockchains along the lines of what Trustabit, which uses blockchain technology with smart contracts to automatically issue passengers with vouchers when their flights are delayed, is developing. In recent weeks, Trustabit signed a partnership with IATA and will sit within the association’s passenger experience arm, which proves, says Saritta Hines, Trustabit founder and CEO, “that the product is a good market fit”.
Trustabit is what Krish Jagirdar, vice president of strategic advisory firm Brand New Matter (BNM), refers to as a "Day 1 Dapp", a decentralised application that can deliver value today. He cites the following reasons:
- Is a simple use case of blockchain technology
- Provides value and improves efficiency for one participant, airlines
- Seems as if it can be easily implemented into the airline technology stack
- Introduces the travel industry to blockchain technology without forcing them through extreme behavioral change
Existential risk
Winding Tree is trying to do something far more complex and Jagirdar’s concern is that the team could face existential risk bringing this to market on top of a nascent technology. “They could do everything right but not be able to reach product/market fit simply because the underlying technology to support a travel platform at scale just isn't there yet, ” he says.
Jagirdar argues that the most exciting developments in the space are taking place at the protocol/middleware layer.
“Companies that are taking aim at bringing a blockchain technology to the travel industry should be focusing on improving internal efficiencies through the use of various blockchain value propositions (distributed, immutable ledger, smart contract technology, hash signatures etc).”
Although Esser agrees, in principle, he argues that travel companies today should also be thinking seriously about the possibility for blockchain’s possibility to deliver an ‘Internet of Value’ as the technology matures.
“The ‘decentralised ledger’ discussion took off on too technical a footing with too much focus on the underlying technology. Instead, the discussion should be on business models and organisational or partnership models. As with Internet protocols, that keep evolving and nobody knows, or cares – and rightly so - the technology will be sorted sooner or later.”
Trustabit’s Hines understands this: “Our users won’t even know they are using Trustabit or blockchain. It will be a seamless experience that happens within the airline carrier.”
Admittedly, Trustabit is doing something far more straightforward than Winding Tree, which is aiming to disintermediate a slow moving industry, where many still have an old-school mentality. But even Winding Tree, as its own diagram below shows, seems to have acknowledged that disintermediation will be relative and there will still be players (namely travel agencies) left, potentially pooling profit.
Though Winding Tree hasn’t ruled out consumers booking on the platform, for the moment it has chosen to go down the B2B road, and says it is 100% focused on working with existing partners on product development, and looking to sign new ones.
As for a blockchain-based platform that consumers can book travel on, Jagirdar is not convinced.
“The idea of evangelising a new way to book that would also require moving onto an exchange, exchanging fiat currencies for some sort of obscurely named cryptocurrency, exposing yourself to volatility risk and then going onto a third-party platform that is nowhere close to as well developed as booking.com or Expedia and then making a booking is a big friction. A huge friction.”
But this friction is not unsurmountable, in the long term. As Jagirdar continues: “In travel, you are talking about thousands of transactions every day, large amounts of money, and in a highly fragmented market. It’s something that requires a strong underlying technology to support it. I’m not sure these monololithic protocols are there yet.”
- EyeforTravel Europe, where Winding Tree and others will be speaking about the latest developments in blockchain, takes place in London on June 4, 5 and 6.
This article by Pamela Whitby, editor of EyeForTravel appears as part of the tnooz sponsored content initiative.Photo by Clément M. on Unsplash