Ai Editorial: Blockchain and loyalty – setting the right expectations

First Published on 5^th October, 2018

Ai Editorial: The utility of blockchain, a shared, secure ledger of transactions distributed among a network of computers, in the travel sector is on the rise. Still there is a mixed response as far as this technology going mainstream in the near future is concerned, writes Ai’s Ritesh Gupta

Blockchain’s use cases, both the in B2C and B2B sectors, have been on the rise this year.

Key developments from various disciplines include:

·          One of the attractive areas in the B2C arena is capitalizing on transparency that blockchain provides for digital transactions to simplify a traveller’s journey. For instance, a customer buys tickets – flight, train, local transportation etc. – and owing to the efficiency of the blockchain ledger one purchase is recorded. This way mobility companies end up offering end-to-end travel, and the ledger accurately splits the payment part, too. DB Systel, the IT provider for Deutsche Bahn (DB), is looking at this option, working with IBM for the same.

·          Online travel company Webjet this year worked on a blockchain-based data reconciliation B2B offering to sort out transaction rows associated with the hotel distribution industry. The objective was to take care of hotel booking disputes in real-time. According to Webjet, a smart contract establishes neutral transaction accounts and can inform any organization contributing in the chain as transaction disputes emerge.

·          A company like ATPCO, too, is looking at blockchain to contribute in the arena of airline distribution. The company asserts that one use case that can be evaluated is related to NDC and One Order implementations by featuring a distributed and decentralized trust-based authority for offers and orders. According to the proof of concept suggested, ATPCO can “act as the authority for the integrity of the offer to ensure that all actions surrounding the offer are managed correctly, accurately, and in compliance with tax, industry governance, and any applicable interline agreements”.  

Being pragmatic 

Talking from loyalty perspective, an airline executive mentioned there is no dearth of application of blockchain in the loyalty space but one needs to be pragmatic when it comes to this technology fuelling innovation.  “It (blockchain) comes into play especially where there has been some kind of previous transfer or messaging being used for transactions. We already had the ability to do transfers and transactions in loyalty through APIs and prior to that through file transfers. So is blockchain going to make a difference by being a support function i. e. to support a business strategy? So clearly business strategy won’t change as a result of using blockchain.”

Nik Laming, General Manager – Loyalty,  Cebu Air Pacific Air, agreed and shared his perspective around what to expect from blockchain.

“There is no doubt that blockchain is a technological innovation,” he said. “(It needs to be considered that) blockchain does have applications, no doubt. But it is being used more as a gimmick at the moment. Rather it should be an IT-driven initiative looking at better ways to transfer data from one system to another.” Laming added, “There is scope for lot of applications of blockchain, both in airlines and in the loyalty arena. (Suitable) where you have got any transfer of data between one system and another especially in the financial world and as loyalty transaction processing system are very similar to banking system anywhere you have got a transfer. For example, to integrate with a partner you could use blockchain effectively to make that transaction so that there was no risk of failure and only one ledger that gets updated.”  

Blockchain is being counted upon to open attractive rewards for loyalty program members. It would help in offering the missing flexibility to spend their loyalty currency. It is being highlighted that just as blockchain-powered solutions help financial transactions happen instantly, they can speed up rewards redemptions too.

Among potential shortcomings, it is being highlighted that this technology is yet to have the technological proficiency required to manage commonplace loyalty requirements beyond basic currency transaction processing.

Loylogic recently referred to single program use case and multiple program use case for blockchain. Dr. Akif Khan, Head of PointsPay, mentioned that it would be tough to “envision any large loyalty program investing wholeheartedly in moving its infrastructure onto a blockchain-based solution when the value proposition compared to existing proven technology remains difficult to prove and quantify” at this juncture. He also highlighted that in case of multiple program use case, issues such as disengagement from the brand need to be considered. In his concluding remark, he stated that at this relatively early stage in the technology’s evolution, blockchain still feels like a solution looking for a problem in the loyalty space.

Hear from senior industry executives about blockchain at the upcoming Mega Event Worldwide (Ancillary, Loyalty & Co-Brand Conferences) to be held in Long Beach, California (31st October – 2nd November, 2018).

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