Blockchain and aviation – will it get off the ground?

Most have probably heard the buzzwords – blockchain, bitcoin, cryptocurrency etc. – but not many people have a thorough understanding of what this emerging technology involves and how it might one day impact our everyday lives. Here I look at how this technology could revolutionise a particular industry, and it may not be the first one you think of: aviation. 

What is blockchain? 

A full technical run down is far beyond the scope of this article, but put very simply, blockchain technology is all about decentralisation. Rather than one entity - e.g. a bank or government authority - holding a database or balance sheet and verifying any transactions, a copy of the relevant ledger is held by numerous participants in a network. Any transaction has to be approved and validated by many different actors before it can be carried out. This ensures no single entity can corrupt or stop a transaction. Blockchain therefore holds a lot of potential for industries where participants wish to interact with many different players with whom they do not necessarily have a pre-existing relationship. There is no need to establish trust between different parties, and there is no centralised authority that can control or manipulate the network. It is, in theory, incorruptible.

Probably the most famous example of a blockchain network is Bitcoin, but it is by no means the only one. From healthcare, to insurance, to financial services, blockchain has a myriad of possible applications that are actively being explored by different industries. So how could it apply to aviation, and how might this affect you?

IATA

The International Air Transport Association (IATA) – the industry body for airlines – has released a White Paper on Blockchain In Aviation. In it, it explores various applications of blockchain to different aspects of the industry.

Given that safety is of paramount importance to anyone who works in aviation, that is a good place to start.

Safety

Aircraft are made up of millions of parts, each with their own manufacturing, maintenance, and installation history. Current maintenance procedures often involve manually recording these details. What if each aircraft part had a digital “birth certificate” along with a full history of all alterations, maintenance procedures, transportation etc., saved on an incorruptible and permanent ledger for engineers to consult? This could result in drastic safety improvements by removing a large element of human error in record keeping. Operators might also be able to better predict when parts need replacing as there can be no dispute as to their service history. Compliance with accepted safety procedures could be better monitored and enforced in jurisdictions with potentially patchy aviation safety records. A report by PwC goes as far as to suggest that through Blockchain technology, an aircraft could have a “digital twin” that “provides a real-time snap shot of its condition from the moment it exits the assembly line to the day 20 years later when it is returned to its lessor or retired from the airline’s fleet."

Aviation accidents often involve a perfect storm of contributing factors, and in many cases faulty maintenance can play a part. Blockchain may therefore be a way to eradicate, or at least minimise, a significant component to mishaps.

Smart contracts

A smart contract is a legally binding contract in which some or all of the contractual obligations are defined in and/or performed automatically by a computer programme. They are usually secured by blockchain encryption. A useful real life analogy for those not familiar with smart contracts is a vending machine: the machine is programmed so that if a certain amount of currency is deposited and a selection is made, a specific item is provided. A contract for sale and purchase has been concluded and executed by a machine based on pre-determined parameters and without human intervention.  The Law Commission concluded in its recent Advice to the UK Government that “the [current] legal framework is clearly able to facilitate and support the use of smart legal contracts." In other words, although automated and pre-programmed, smart contracts adhere to the same legal principles under English law as traditional contracts.

Blockchain offers the possibility of concluding ever more complex and sophisticated smart contracts, all underpinned by encryption technology. A practical example that might interest consumers is claims for cancellation and/or delay under EU Regulation 261. Airlines have been desperate to cut out the middle man from these claims, and blockchain might just be able to streamline the process  - e.g. if flight cancelled, pay passenger £X. Other uses could include tracking baggage or cargo. At a time when airports are under immense pressure from passengers returning to travel post-covid, the need to streamline such processes has never been greater.

Privacy and data protection 

Although restrictions imposed during the pandemic have generally eased, in many jurisdictions passengers may still be asked to prove their current health - e.g. vaccination - status. This naturally raises questions about privacy, confidentiality, and data protection. SITA, the IT provider for the air transport industry, has advocated for the use of blockchain technology to help airlines ascertain someone’s health status and travel history without intruding on or collecting other personal data. This could help streamline a travel/customs/immigration process which many travellers will have found frustrating in recent times.

Conclusion

These are only a few examples of the potential use of blockchain in aviation. Every day the technology is becoming more sophisticated and developed, and it is surely only a matter of time before we see it used in practice. As they say, the sky is the limit.

Find out more about Irwin Mitchell's expertise in aviation cases at our dedicated air accidents section