Honeywell recently announced the launch of its online buying and selling platform for new and used aircraft parts. Not only are online transactions in this space extremely rare, but Honeywell is also doing something even more uncommon: using blockchain technology. According to Lisa Butters, who leads the Honeywell Aerospace venture, “Currently, less than 2.5 percent of all transactions in this space are done online.” She continues: “We are the first marketplace to enable customized seller storefronts, and we are the first to leverage blockchain technology to build trust between the buyer and seller.”
Why blockchain was adopted
Honeywell believes the success of their platform depends on the blockchain factor—or as mentioned in the e-commerce platform: trust. Customers need a way to ensure the parts they are receiving are authentic, that they are getting the best prices and that they are safe from scams and potential problems. With blockchain, they are able to precisely track the parts, ensure they are accompanied by images and quality documents and that they are immediately available for sale and shipping. It seems like now that Honeywell has decided to try the new platform, they want to do it right.
A valid concern
According to Deloitte, the maintenance of an aircraft is a process that uses cumbersome databases at best and a paper-based system at worst. A commercial aircraft can be in use for up to 30 years and change five or six owners. Thus, tracking information (especially maintenance documents) and passing it to other parties becomes a tough and error-prone process.
Blockchain creates an immutable record of the maintenance history of an aircraft, detailing and timestamping who performed what inspection and when. This also has another, equally important side effect.
In 2015, the Federal Aviation Administration accused the American Airlines of committing maintenance fraud. The issue was reported by mechanics working in American Airlines who noticed “aircraft maintenance discrepancies in accordance with required manuals, procedures and the Federal Aviation Regulations.” If a blockchain technology was adopted, chances for such deviations could be minimal (if not eliminated).
Not a silver bullet
While blockchain could solve some of the aforementioned problems, it has certain strength and weaknesses. According to Artem Orange, CEO of Aeron: “In aviation, there is a great variety of guidelines that leave little room for possible violations, so we can say the entire aviation industry is quite effective and safe even without the blockchain technology. This means that is quite challenging to find a valuable application for the new solutions based on the blockchain technologies.” He continues: “However, the examples of Aeron and Honeywell show that there are certain applications out there, where the blockchain is effective and provides solutions to the real issues.”
What blockchain can do for aviation
The aviation industry has huge potential for blockchain disruption due to the many players involved, who are often from different countries. According to Kevin O’Sullivan, lead engineer at SITA Lab, each flight involves two airports and one airline, each operating their own separate databases. As such, the blockchain technology offers the ideal trustless and decentralized solution to connect and coordinate all parties. In fact, an Accenture report predicts that more than 85% of aerospace and defense companies will be using blockchain by 2021.
On July 16, Accenture announced a partnership with Thales to use blockchain technology to bring a single, shared view of the supply chain for partnering suppliers, manufacturers and operators. The next day, Boeing announced a partnership with SparkCognition to “use artificial intelligence and blockchain technologies to track unmanned air vehicles in flight and allocate traffic corridors and routes to ensure safe, secure transportation.”
In the same month, Singapore Airlines became the world’s first carrier to launch a blockchain-based airline loyalty system. With this system, loyalty points will no longer pile up as passengers can redeem them on smaller and local providers. Prior to that, Air New Zealand teamed up with Winding Tree to use blockchain to improve booking and baggage tracking services, and Lufthansa partnered with software giant SAP for flight booking, loyalty programs and supply chains.
It comes without saying that using blockchain significantly reduces the costs, as the intermediaries who sometimes charged up to 25% are removed. Banks are also removed which not only reduces the associated costs but also speeds up the procedure and makes instant payments and commissions available.
Finally, blockchain can be used for security and identity, where not only does it offer a unified way to verify passenger identity, but also offers a very secure system where the users can control who has access to their data, and to what extent.
Aeron has an interesting use-case—they apply this feature not on the passengers, but on the pilots. Aeron’s app logs pilot flight hours on the blockchain, and the system aims to track global data on aircraft and flight schools, which otherwise could be easily forged. Considering fatal incidents where pilots flew without having a license, this is a valid concern.
The trends for 2019
Blockchain had its downtimes in 2018, but it is still progressing—slowly but safely. In the words of Artem Orange, “Aviation is one of the most regulated areas of human activity; therefore the introduction of new technologies requires long review and approval cycles.” It might be hard for blockchain to enter the aviation industry but it is a field the shared ledger can radically disrupt—for both the passengers and pilots, as well as the corporations.