Blockchain is set to revolutionize aviation payments and supply chains
While still a new concept, blockchain is already disrupting the fintech industry with its secure operating principles, so here’s why blockchain is already on target to improve the aviation industry as well.
Payments is one major benefit. Aviation has a special role in supporting the growth of developing countries and their infrastructures.
In remote locations aircraft may be the only option available to transport people, medicine, and goods so it is paramount that aircraft stay operational for the safety of these communities. International money transfers help keep these aircraft flying.
While the viability of international money usually does not cause a problem there can be delays when the request is urgent or last minute, like in the case of an emergency. When this happens the holding period banks place on money can be the difference between life and death.
Using blockchain for micro-remittance transfers allows for transactions to be made without the holding times that exist with centralized financial institutions.
This is possible because blockchain technologies reduce the need for intermediaries by securely going to P2P. Applications are in development that fix the value of digital cash in real time permitting the user to hold this digital cash and transfer it when necessary while also minimizing processing fees.
Supply chain payments and risk can also benefit. From the time an aircraft part is created to the end of its serviceable life all appropriate information regarding its use will have been logged.
While normally a trusted and standardized process there have been cases of parts fraud in the aviation industry putting countless lives at risk. Several years ago a part broker was caught misrepresenting the condition and origin of the aircraft parts he was distributing out of Miami.
Through an investigation from the FBI it was uncovered the parts supplier used unauthorized dealers to manufacture the parts and concealed the process by creating a Certificate of Conformance with a forged OEM logo.
While part brokers are often a secure and economical option to fulfill a need, cases like what happened in Miami indicate they can carry a higher risk, especially for life-limited parts. Using a part’s serial numbers and RFID tracking, combined with the blockchain will provide a modernized and immutable method for aircraft manufacturers, and their buyers, to confidently track the condition of their parts.
Since every transaction on the blockchain is verified by multiple nodes the parts broker will benefit as well. The distributed ledger allows for smart contracts that can quickly change the ownership of physical assets through digital means effectively increasing the speed and efficiency of the parts supply chain.