Pedro Anderson, founder and COO of the nonprofit travel
distribution platform Winding Tree, is something of an evangelist for open-source
computer code, calling it "the only way to truly innovate."
It's also a foundational value of Winding Tree, which
develops in blockchain, an open-source technology.
"If you look at most of the innovations that we're used
to and so comfortable with today -- email, phones, for example, even Macs and
Apple and Android devices -- those are all built on open-source technology,"
he said. "Without open-source technology, you can't accelerate at the same
Unlike proprietary code, open-source code is made freely
available and may be redistributed and modified. That means that if a developer
is working to solve an isolated problem, others can use the resulting code and
build upon whatever progress that developer makes.
At the moment, the industry is just beginning to explore the
potential of blockchain in travel solutions. Winding Tree, for example, is one
of a number of industry players, including IATA, that are mulling how
blockchain-based technology will impact airlines.
Its ultimate uses are unclear, as is its possible impact on
travel advisers, which depends heavily on how it is ultimately adopted and
applied by suppliers.
Whatever that eventuality, Phocuswright analyst Norm Rose
thinks blockchain has already been hyped to excess.
"I think that the reality of blockchain is like every
emerging technology," he said. "It's been overhyped, and now it's
kind of sliding down that Gartner Trough of Disillusionment."
Rose was referencing research company Gartner's theory of a
new technology's hype cycle. According to that theory, innovation is triggered
and leads to a Peak of Inflated Expectations, then drops dramatically to the
Trough of Disillusionment before slowly rising again until the technology is
used productively and its promise matches expectations.
Rose, who is also an adviser to Winding Tree, added, "I
actually think [blockchain] has been overhyped so much already that now we're
looking for actual, practical issues here."
Winding Tree's foray into the blockchain-and-airlines space
began last month with a hackathon that brought together startups, airlines and
The key thing for agents to watch for is someone creating a desktop solution for agencies that employs blockchain technology to access more content.
Blockchain was initially created more than a decade ago to
execute and secure transactions of the cryptocurrency bitcoin, but many believe
its technology has potential in other areas.
A blockchain database stores information in blocks across
multiple computers on a peer-to-peer network. Transactions are verified by "miners"
who are compensated for verifying transactions, which are then immutable.
Winding Tree has recently entered into several airline
partnerships, such as with Air France-KLM, which joined the company at the
hackathon. Anderson said the event was successful largely due to the fact that
it drew a wide variety of participants -- airlines, startups, blockchain
experts -- thanks to the open-source nature of Winding Tree's platform.
Evidence of collaboration was clear when the team from Air
France included an application programming interface from competitor Lufthansa,
another participant, as part of a solution it created to aggregate airline
inventory and make it accessible on a website. The solution isn't complete, but
it will contribute to further development, Anderson said.
"The roundtable saw very lively discussions around the
future of the platform, the role of open source in the industry and the
business cases for suppliers specifically," he said.
As identified during the roundtable, the areas of the
airline industry that could be most impacted by blockchain were distribution
cost, the pace of innovation, the barrier to entry for startups and the level
of control that airlines have over the distribution process, said Anderson, who
added that he believes blockchain will have applications in distribution,
aggregation, settlement and other areas.
Rose pointed out that transactions completed via blockchain
are still very slow, with only a handful taking place every second, in stark
contrast to the thousands of credit card transactions that can occur every
second. Regarding airlines, he sees the most near-term applicability being
loyalty programs: storing and tracking data and sharing it across alliance
IATA is exploring several uses of blockchain, according to
Houman Goudarzi, manager of innovation, financial and distribution services.
Like Phocuswright's Rose, Goudarzi maintains there is still a lot of hype
around blockchain, but he argues that it does have benefits related to
integrity and immutability.
IATA began looking at blockchain in 2014, investigating ways
to use the technology to solve existing problems. For example, he said, IATA is
looking to make its own financial systems more efficient so airlines benefit
from faster transactions.
IATA is also looking at applying blockchain to digital
identity management, which would help limit exposure to risk. For example,
think of an airline issuing a ticket to an agent. It's important that the
carrier knows who the agent is, and blockchain could securely authenticate a
The first substantial wave of blockchain implementation in the travel industry will likely be for settlement and recording, according to panelists at ARC's Travel Connect conference outside of Washington last month.
Goudarzi said IATA is also considering "smart contracts"
that explicitly state guidelines, are triggered by an event and fulfill
For example, he said, when a plane lands, the airline pays a
fee to the airport based on a formula the airport sets, usually taking into
consideration the type of aircraft. A smart contract knows the type of aircraft
that is landing and the formula for charges, so the plane's landing is the
event that triggers the contract to be executed.
"This way, you're getting rid of the enforcing of
contract, monitoring compliance, the reconciliation, billing and invoicing,"
Goudarzi said. "It's all pretty much avoided."
It's difficult to predict how long it will take to introduce
blockchain technology to the airline industry at scale, Goudarzi said.
Implementation also faces challenges in governance, scalability and the cost of
Winding Tree hopes to have distribution infrastructure for
airlines in place next year. It already has infrastructure in place for hotels,
which is nearly complete.
Blockchain's impact on agents depends on the uses that can
eventually be adopted at scale, Goudarzi said. For example, agents would likely
recognize efficiencies from digital identity management that leverages
blockchain technology, and they would also be better protected from fraud.
Rose said blockchain technology could also change the
"There might be a faster payment rather than [what]
exists today and maybe settlement directly with the airlines," he said. "I
think that area of payment and speed -- whether it's speed collecting
commissions or speed of just resolving and finalizing a transaction -- is going
to benefit the travel agents."
The key thing for agents to watch for, he said, is someone
creating a desktop solution for agencies that employs blockchain technology to
access more content, perhaps in the form of an app for an existing workspace,
such as Sabre Red.
"I think that's where the focus has to be from the
travel agent's side," Rose said.