Blockchain and the Future of Air Travel.
Air travel has seen year over year growth since its 2011 decline, and with a projected doubling of aircraft passengers by 2036, airlines will have to overcome several issues to meet demand.¹ As more passengers lead to an increased number of flights, airports will find themselves more congested, requiring more staff than ever before. Following the same growth pattern is the outsourcing of ground support personnel, with some airports seeking third party companies to deliver over 50% of labour.² These third-party entities rarely implement interoperable technology, and therefore an increasingly disjointed and difficult to manage ground support infrastructure is created. Before any further expansions to personnel and customers occur, airports need to find a solution to scaling, safety, and efficiency issues that could lead to their demise. As is the case in any industry, those who fail to advance and adopt nascent technology may find themselves irrelevant. The airline industry has long been aware of their interoperability issues in regard to ground support, and we believe that leveraging blockchain technology may be able to bridge the gap between airports and their support staff. The following article will address current issues in the airline industry, as well as an analysis of the current state of airlines, before we look into possible blockchain solutions and use cases.
Ground Support Categories
We'll begin by providing a simple breakdown of various ground support roles as they will be a constant topic of discussion in this report. Ground support personnel can be separated into the five main categories outlined below.
Field Support: Responsible for dispatching the aircraft and maintaining communication with operations at the airline, as well as with Air Traffic Control.
Passenger Service: Passenger service personnel provide services inside the airport terminal such as check ins, arrival and departure, boarding, and closing flights. They are also the staff present at customer service counters and lounges.
Ramp Service: Most of the services that constitute ground support are encompassed on the ramp. These services can include, but are not limited to, aircraft marshalling and pushback, lavatory and water sanitation/replacement, luggage handling, and fueling.
Catering: Catering services include prepping meals, mostly off of the plane, as well as removing and replacing full trolleys. Meals and beverages for staff and customers must be restocked as well.
Cabin: Cleaning and replenishing consumable goods on the aircraft are the responsibility of the cabin personnel. This team will wash items such as blankets and pillows, restock lavatory necessities, and ensure a neat environment inside the airplane.
Disjointed, Outsourced, Ground Support
With airlines choosing to outsource more ground support roles each year, they are finding that some of their largest issues arise from poor training, disobeying regulations, and overall operational mismanagement. The crucial period that aircrafts spend on the apron equates to time that airlines are not making money, therefore any delays on the ramp directly affect an airport's bottom line. At any given time, an aircraft may have 10 to 15 different ground support equipment (GSE) vehicles operating on it. These vehicles range from luggage handlers and caterers to water services and de-icing machines. Unfortunately, everyday occurrences with GSE vehicles lead to airport damage and delays as vehicles are left unattended in obtrusive places, or are dangerously driven outside of marked roadways. Training for such equipment is also lacking, leading to improper maintenance, service and repair expenses, and even issues during apron deployment.⁴ If a problem does occur with GSE, the necessary steps must still be followed, even without the machinery, putting more stress and time constraints on ground support workers.⁷ Although specialized training, classes, and certifications are required for almost every ground support role, problems arise from disjointed systems and even language barriers.⁵ Difficulties for outsourced support arises from ground handling requirements and processes differing from airport to airport. Many ground support labourers will operate out of several airports and end up being exposed to varying procedures.⁶ Unfortunately, this confusion and the unsuccessful organizing and monitoring of ground support roles make it difficult to get a plane in the air efficiently. Airlines need to orchestrate many steps concurrently in order to get an aircraft off the ramp, and these operations are undertaken by many different teams who may not even implement a digital system for the airline to reference. Subsequently, airlines will run into poor time management and disorganized processes as outsourced support needs to work with and around each other in a highly time constrained situation. Some support may still be using a paper-based system for their operations, and this kind of information may not be imported into any kind of logistical system until the day after a flight occurs. Unfortunately, even if companies are using digital systems, they still may not be interoperable with each other, leaving airlines in the dark about what is happening on the ramp and why a flight may be delayed. Interestingly enough, over 10% of flight delays are caused solely by the inefficient management of ground support workers.¹⁴
Inefficient or Dangerous Procedures
Airlines are currently facing a $12 billion problem when it comes to aircraft damage and the ensuing death and injury costs of ground handling accidents.⁸ The previously mentioned lack of consistency and operational process clarity is resulting in a dangerous work environment for ground support. There are a few culprits for why ground support accidents are increasing year over year; pressure to be quick, congested airports, poor technology management, and a lack of training and education for workers are just some of the issues.⁹ Flights are increasing at a rate faster than airlines can find qualified ground support, and this problem is compounded by the fact that labour costs are the highest expense for an airline. As airlines struggle to find workers, their bottom line usually wins out and cuts are made to save money at the expense of experienced ground support.⁶ As workers rush through procedures, disobey airport regulations, and work independently of each other in order to service aircrafts, the result is almost 250,000 ground occurrence injuries each year.⁹ Issues such as cramped aprons, ground support shortages, and unclear regulations, however fall on the shoulders of the airport or airlines. In terms of operating procedures, adopting new technology can lead to decreases in not only staffing costs, but also airline liability regarding customer luggage. For example, take the $3.3 billion dollar per year baggage issue plaguing airlines and affecting more than 42 million passengers. Self-check in has reduced the amount of staff necessary at check in points, and innovations such as baggage tracking are expected to save almost $2 billion a year in mishandled baggage.⁸ Airlines and airports also butt heads when it comes to poor procedures and unclear guidelines when issues arise on the tarmac. In November of 2017, an Air Transat flight left passengers locked in a plane for over 5 hours. As the air conditioning turned off and the power went out, passengers began to call 911 as they sat in the dark, unaware of why they couldn't de-board. The airline blamed the airport for not providing stairs for the passengers to get off, however the airport provided photographic evidence of the plane with stairs attached for de-boarding. In this situation, Air Transat was ordered to pay almost $300,000 to the passengers of the flight, on top of covering all of their out of pocket expenses for the flight.¹⁰
Communication and Reactive Decisions
The problem with information sharing and data input in a disjointed system is especially unsettling when occurring in the airport industry. As previously outlined, field support workers need to stay in touch with air traffic control in order to ensure that flight paths are safe, and any issues can be addressed as quickly as possible. However, when airports are using outsourced labour that does not operate on a single or interoperable platform, pieces of important data are missing. This leads to reactive decision making by controllers who may not have been provided all the information needed to make informed decisions. Remember the companies who are using paper-based systems? That information may not be available to air traffic control even though the flight is in the air. When something does go wrong, regulatory bodies need access to all the information pertaining to a particular aircraft. When that data is stored across various databases, audits become a daunting and time consuming, inefficient task.
Scalability and Future Growth
We've already outlined the pressure airports are feeling as increased flights and passengers lead to crowded airport terminals and aprons. However, this problem is only expected to increase as projections tout a doubling of passengers to almost 8 billion by 2036.11 Governments and municipalities will need to work together in order to create a more viable system. Not only will the infrastructure inside of airports become outdated and inferior, but the vicinity surrounding major airports will see even more traffic and congestion. With the number of operating aircrafts increasing, emissions from additional flights will also need be controlled, and of course, the ground support staff will need to be properly trained and prepared.¹¹ In order to manage a successful operation in an industry that is expected to double within less than 20 years, airlines and airports cannot depend on the systems that are currently failing them. Technological advances are taking place in various airports across the world, for example Dubai's gateless border¹² and Canada's digital identity prototype¹³ are both looking to increase efficiency and provide a better experience for travellers through the use of blockchain technology.
A Closer Look at the Airline Industry
Political & Regulatory
The largest regulatory changes to take place in the airline industry occurred after the 9/11 terrorist attacks in the United States. Prior to 2001, most security measures were outsourced to private companies and substantially less checks and screenings of passengers were required. Post 2001, new regulations enforced all security checks to be enacted by members of the Transportation Security Agency (TSA), airports could opt of the TSA security and use private companies, but they would still be overseen by the TSA.¹⁵ The enhanced security measures meant an increased labour force, additional gates for checks, metal detectors, screening equipment, pat downs, longer wait times for passengers, the banning of many items on airplanes, and bulletproof cockpit doors. Funding for the TSA increased from around $2 billion in 2002 to almost $8 billion in 2013.¹⁶ Unfortunately, increased spending and extra security measures were revealed to have a 95% failure rate of detecting security threats after a 2015 report by Homeland Security used undercover agents in dozens of the United States' busiest airports. Technological advancements are now being implemented more often to remove human error that fails to detect security threats and create a smoother, faster, and automated system.
Industry wide profit margins in the airline industry average around just 16% globally and operational expenses account for 62% of total costs. Of those operating costs, almost 60% are for both internal personnel and contracted services.³ With labour not only representing huge costs for airlines, but also having a massive effect on their bottom line, streamlining processes and creating an interoperable, efficient system would positively affect airline revenue in the future.
As airport security exploded over the last 20 years, customer service has apparently followed the opposite path. With security measures further encroaching on civilian's rights, lawsuits and complaints have become an issue for airlines. Viral posts have been a regular occurrence in the news, and more lawsuits are popping up against massive airlines and airports. With airports sometimes seen as responsible for the shortcomings of an airline's decision making, creating an organized system to maintain expectations and increase efficiency could reduce complaints and lawsuits for airports and airlines alike.
Market & Competition
With the immense amount of responsibilities inside the airport, on the ramp, and inside an aircraft, airports and airlines have difficulty successfully managing every aspect of aircraft operations. For this reason, there has been a trend towards the consolidation of various ground support services to a few major companies such as Menzies or Swissport International. Both provide services for ground handling, cabin, cargo, and fueling to airlines around the world. However, this level of consolidation can come with a lack of performance as few companies monopolize the market. The peer-to-peer commoditization of labour would allow for certifications, employment records, and job capabilities to exist and be verified on the blockchain. Additionally, a decentralized system could reduce costs by more effectively utilizing the labour pool and reducing turnover from full time work shortages.
The immutability of blockchain technology in the airline and airport industry is a benefit that cannot be overstated. Blockchain technology would allow for airlines and airports to receive verified numbers for their operational expenses, aid in audits from regulatory bodies, and even improve labour costs with peer-to-peer employment. A trustless system would allow airports and airlines to work together in order to have all the data necessary to operate powerful and resourceful businesses while lessening their responsibilities in managing outsourced work.
Benefits of Blockchain Technology
Maintenance records could be automatically verified and written to the blockchain as soon as the processes occur. This creates an unchangeable and timestamped history of when a particular action occurred, creating a better system for auditing and reducing fraud from outsourced workers falsifying records. In flight data can also be transmitted from an aircraft's computer system onto the blockchain in order to keep real time records of flight data for Air Traffic Control and airline reporting.
Blockchain identity management would allow for passengers to keep a digitalized record of their personal data on a secure platform that they control. Eventually, records such as previous flights or even passenger vaccinations could be stored on the blockchain and selectively shared with airlines and airports in order to travel more efficiently. A passenger would be able to grant permission to their personal and verified records, therefore creating credibility with airlines and possibly reducing checks and balances necessary for travelers who must fly constantly or are low risk. Decentralizing the system would make it less vulnerable to centralized data breaches, and blockchains can even be structured to be a private, permissioned system where only certain people are granted access.
The global, peer-to-peer system that is inherent in blockchain technology would be able to create a sharing of data that does not currently exist in the airline industry, even though airlines operate on a global scale. Each airline and airport could contribute to a global blockchain that provides data to Air Traffic Control or government agencies for safety and regulatory assurances without providing their data to competitors. The system would be more efficient for governing bodies and allow them to make informed decisions as opposed to the current system of disjointed or sometimes non-existent flight data. The peer-to-peer nature also allows for the pooling of resources and a more efficient use of the available labour force. Personnel would be able to apply a similar system to passengers with identity management, sharing necessary information such as certifications to ensure high quality employees with verified credentials.
Coupling blockchain technology and biometrics allows for more efficient verification systems in airports that would require less staff, therefore reducing labour costs and avoiding expensive delays. IoT devices link sensors to airport and airline computer systems to automate clearance and checks for passengers and personnel in the airport, on the aircraft, and anywhere in between, such as smart luggage tracking and digital, automatic check in.
Applying Blockchain Technology to Airlines
Tickets can now become a tokenized asset that is verified and written to the blockchain. These tokens can be linked to a digital identity, and as previously mentioned, airport check ins could be autonomously completed using smart gates that can detect and ask for approval to view and verify your ticket token. Tokens could also be linked to a smart contract that holds automatically initializing processes based on airport or airline input. For example, if a flight is cancelled, the smart contract may be coded to provide a refund back to the wallet of the token holder. Tickets would also become a globally accessible asset if they were to reside on the blockchain, being able to be purchased and sold without international borders. Such processes would not only reduce the amount of staff and extra precautions taken by security, but it would also reduce redundant paperwork associated with tickets.
Immutable Maintenance Logs
IoT devices could be set up on various GSE vehicles to monitor the amount of resources used on an aircraft. Through tagging food trays, if someone were to get sick an airline could work backwards through a blockchain verified supply chain to see where the food came from and exactly what flights it ended up on. This would reduce the time needed to perform audits and create an immutable data source for airlines to monitor outsourced personnel. Automatic entries would remove the ability for personnel to falsify records and negatively impact an airline or airport's bottom line. Using the blockchain as a common platform for data also creates a streamlined system, accessible through permissions to those who need it, but stored across a global network, making it more difficult to breach.
Accessible Data Storage
Currently, information about flights, personnel, passengers, and ground support processes are all stored in various locations, if there is even a record on file. Writing data to a blockchain ensures there is a consistent process and an accessible, immutable database available to those who need to gather information for regulatory, safety, or security purposes. However, this multitude of data would not be stored in a centralized location, lessening issues with slow networks, data breaches, or maintenance shut downs. At present, data may not be uploaded into a system for a day, and even when uploaded, the various systems are not interoperable, meaning data collection is a slow and tedious process. With a projected doubling in passengers in under 20 years, the airline industry's current technological platforms will not be able to efficiently scale.
Verified Digital Identities
Using digital identities for both personnel and passengers would remove the liability involved with storing personal information. Blockchain applications would put control of personal information back into the hands of the owner as opposed to it being stored and used by centralized systems. Airports and airlines would still be able to access the information deemed as necessary, and it would be an automatic red flag if a passenger was not willing to share such data. The digital identities would also interact with IoT devices for automated check points and validation before flying. Access to classified areas could be implemented through permission granted to a personnel's digital identity and revoked at the right of the airport or airline, a more secure solution than keys or fobs. Verified certifications could also be placed on the blockchain in order to ensure the highest quality personnel are hired.
Clearly the airport and airline industry is ready for an overhaul in regards to their technological capabilities, efficiency, and safety. Applying blockchain technology to each of these aspects of their business model will improve current systems and successfully bring airlines and airports into a future dependent on technological innovation and adaptiveness.
- Ground Handling International Magazine, April 2015.
Coinaccord is a Canadian Blockchain Venture Studio that strives to create entirely new and decentralized models on a global scale. As a company run by humans, we want to know if we've made a mistake. Do we need to make a correction or do you have a different point of view on the topic? Let us know in our Medium comments.