Flying the flag for blockchain
Blockchain: transforming the aviation industry
David Galea and Brendan Mckittrick are long-serving veterans of the aviation IT industry. their portfolio of experience has seen them work closely with airlines to help them improve their revenues, reduce their costs, and transform their customer experience – 3 tenets they sought to bring to the Aerobrand brand after a chance encounter last year. Katy Micallef catches up with them ahead of their November launch.
Aeroband founders, David Galea and Brendan McKittrick have some lofty ideas when it comes to revolutionising the aviation industry. Their combined experience in the aviation industry resulted in instant synergy, which helped bring about their vision to improve the lot of stakeholders in the industry, not just for airlines but all players. And as Brendan says, it was a ‘really enjoyable’ process. “I wanted to do something a bit more focused, a bit more agile and at the cutting-edge of technology. Starting a company with David was absolutely perfect; it’s just been all pleasure since then,” says Brendan. “We both had the same vision, we knew we could do this, we know there’s a gap, and we both had the same idea to fill it. What I was missing he had and what he was missing I had,” explains David.
After a spell working in a couple of different industries in the late nineties, Brendan made his way back to aviation but was struck by how nothing had really changed, the same problems being faced by the airlines were still there – in fact the problems were getting more acute.
IATA’s data on the sale price for an airline ticket in 2019 illustrates just how badly airlines are losing out. On average, the going rate for a ticket is $188, of which $47 (21%) is allocated to fuel, $47 to labour costs, $91 (55%) to all other costs and a final 3% in profit. The airlines take the full weight of the risk management in the aviation space; they take the full risk of the asset cost, which starts with the $200m aircraft. “There’s a lot of people making money in the aviation industry along the chain – but it’s not the airlines,” says Brendan.
Brendan and David believe blockchain technology allows you to do things differently. In this industry it’s hard for airlines to share their information as big operators have positioned themselves in the middle to be the brokers of that information and while some of them do a good job, they keep the airlines siloed and end up taking the lion’s share of the profit, which means the airline doesn’t get much at the end and has to invest further funds into administering and reconciling the transactions that go through all the applications they buy.
“The airlines themselves are looking to deal directly with their customers and they’re also looking to collaborate, so if you can build a blockchain which stores all the pertinent information required to run an airline, to create an application to act as trusted agents between the airlines, you can stop this whole industry of double checking.
Airlines could settle debts directly between each other and reduce conflict, while cutting out the middle-man. This could reduce cost on many different fronts. For example, Cargo companies could track parcels through a very reliable trusted network, where the consumer can see the information is verified and guaranteed and cannot be changed because it’s immutable and time stamped.
Part of what we’re doing is creating a blockchain which is eventually owned by the community, controlled by consensus, and serves the community – we think that’s an important component of this. What happens with the middle players in a natural capitalistic way is that it’s become self serving and the airlines themselves do not benefit in the way they should.
What you have at the centre is a blockchain; it doesn’t have a CEO or staff, just an autonomous running blockchain which will use smart contracts that were created by the industry, for the industry. Agreements to execute or share value will allows real time movement of value without having to have multiple accounts all over the world and foreign exchange currencies – so it simplifies the relationship as well,” says Brendan.
‘The picture is so big’, opines David. “While businesses have become efficient over the years, in the airline industry the processes they have don’t change so they’re constantly paying money they really shouldn’t be, they’re paying three times for a simple job that three different people are doing. What we’re trying to do is not change the world but change the way they do business – taking that expensive last part of the process onto the blockchain which makes it far cheaper in the operational mode, hence boosting the very meagre profits.”
By the people, for the people
As David explains, they’re building a community and the ID3 thought process is key to creating that momentum. In this case there’s no such thing as too many cooks. By getting at least three different peers to give their input you can avoid software that has been built according to individual nuances. ID3 enables the right combination of requirements to come together and create something that will cover the needs of all other stakeholders in the industry. Each of the 3 peers who create a project have to sign up for a minimum amount of years to use it. This means that we can show what the return on investment will be before the project even starts, giving investors of that project an up-front and very realistic view of the return on their investment.
“Once that application goes onto the blockchain, it doesn’t matter who invested in it or built it, they all get their fair share back. The idea is three will get together and create an application on the blockchain which all the other airlines can rent. Instead of paying to build it again, they just use that existing application and pay a transaction fee going forward. The process can then be repeated with different groups, creating a blockchain for all. That’s how we create a community.”
Aeroband doesn’t just run on any old blockchain however, through a partnership with Holochain they have avoided the limitations of a classical blockchain – such as low transaction rates. “When dealing with the aviation industry you’ve got to deal with very high transaction volumes and real time processing. Classical blockchain was not an option for us, and we didn’t have time to wait for someone to work out a way to make it catch up.
“Holochain sets out not to replicate the classical blockchain but uses a distributed hashtable, so rather than having a full copy of the entire ledger on every single node, it shards and distributes the ledger across the entire network- so the network is not delayed by huge amounts of consensus or laboured by updates. We’re very happy with our choice and we believe we’ve chosen the right distributed ledger. As the network grows the efficiencies get better, the performance more robust – all the things that are important to us – “At the moment we’re running a proof of concept in house with Holochain on a controlled closed network, and we are overjoyed at the results. 50,000 transactions a second out of the box is exemplary against any yardstick you wish to measure it. We believe we have ticked the boxes and are confident we will have the most secure and fastest Aviation Industry Blockchain in the world bar none on our launch.”
Besides the AEROBLOC, Aeroband has another arm to its operations – AeroLabs, which is an incubation software development house and testing centre. AeroLabs is the working space where either new apps are built or ones that are being converted are tested before they go live on the AEROBLOC.
You’re launching at our summit in November…
“When I was there, there was a good buzz in the air. There were a lot of services around with a well thought out road map for start-up companies. I thought the legislation was excellent; indeed the Oxford University “blockchain course I attended lists Malta as the leading legislation in the world which made it even more attractive to me. David also lives here, so it was an easy decision to make Malta the spiritual home for Aeroband, and when David mentioned the actual conference and the content I was pretty excited about it,” says Brendan.
David also emphasises that when it came to picking an event to work with there was no comparison. ” I know the management of AIBC personally, so I know what comes with it. With AIBC Summit it’s not just about putting a stand together; the company makes the effort to introduce us to people in the industry. It’s a good all round package, which is what you need in the industry we’re in. We are Aviation guys, so need all the help we can get in being introduced to the right players in the blockchain spare. We want to invite any companies who feel they’ve got some input or interest in working with us to let us know so we can marry them with the right projects.”
We don’t talk about the blockchain
“The idea is the blockchain should be irrelevant – it does a job and it does it well, letting you focus on the business. What’s the business outcome you’re going to bring? It might involve blockchain to get to the outcome but we don’t talk about the blockchain. We buttress that underneath the solution by giving that value, that’s what we bring to the table. The airline or the airport doesn’t need to be frightened by the new technology and the lack of knowledge – we bring that and just focus on the business outcome.
We’ve seen the stress on the airlines to improve productivity and costs – at the same time they’re charged with transforming the user experience from a very old staid demure model which is very rigid to an agile easy moving model. Blockchain makes life easy for everyone.”
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Malta AI & Blockchain Summit is a bi-annual expo covering topics relating to the global sectors for blockchain, AI, Big Data, IoT, and Quantum technologies. The event includes conferences hosted by globally renowned speakers, workshops for industry learning and discussion, an exhibition space accommodating more than 400 brands and a number of networking events.