APEX Insight: Whether cryptocurrencies will thrive or tank is anyone’s guess, but the underlying blockchain technology looks like a guarantee for the airline industry.
Cryptocurrency payments are fast and secure with no exchange rates or international fees – a dream for airlines, which stand to save time and money on everything from refueling and maintenance costs to logistics and flight planning by moving to blockchain-based payments.
While the blockchain model is stable, cryptocurrencies are in flux. In December 2017, the value of one bitcoin spiked to $20,089 before plunging to $6,048 just two months later. Many airlines have nonetheless already begun to tentatively incorporate cryptocurrency into their strategies.
In 2015, Universal Air Travel Plan (UATP) partnered with Bitnet to launch cryptocurrency payments for 260 airlines. These payments won’t be dealt with by the airlines directly: UATP will handle processing and currency conversion, suggesting that there’s still reluctance from airlines to fully commit. Last year, Japan’s Peach Aviation announced plans to integrate bitcoin transactions into ticket sales and airport shopping; the move is part of an effort to appeal to crypto-savvy tourists from China. Originally set for launch in December 2017, these plans were rescheduled by Peach for this past March. As of now, they’re on hold – but not canceled! – with the airline stating that it’s waiting for the market to settle before making further moves.
Airlines are clearly cautious about cryptocurrency, but they’re certainly not ruling it out, either. Robin Hopper, SVP, Product Strategy and Marketing at Guestlogix, says that growing consumer demand might push airlines into making a decision: “Airlines are putting greater emphasis on creating a ‘consumerized’ passenger experience – for in-flight sales as well as the passenger journey as a whole – and two central aspects of that approach are meeting the expectations of the mobile-first customer, and embracing the best practices of leading on-the-ground retailers. Accepting cryptocurrencies for in-cabin purchases fits into this strategy, because customers are receptive to – or demand – this payment method.” AirAsia, for example, has plans to launch BigCoin later this year, which passengers could use to pay for in-flight meals and seat upgrades. But the airline also hopes the cryptocurrency will help mitigate some of the exchange rate risks.
“Airlines could offer crypto-only products, such as unique menu items or exclusive duty-free products.” – Maxwell Arnold, Global Blockchain Technologies
So how would a shift to cryptocurrency impact passenger purchasing? Maxwell Arnold, senior analyst at Global Blockchain Technologies, speculates on crypto’s potential to add new layers of value to upgrades and ancillaries: “If you restrict the availability of exclusive or premium products to being purchased only with a crypto that frequent customers would have (such as if an airline’s loyalty program is tokenized), it rewards those customers for their patronage.” Detailing potential applications, he adds: “Airlines could offer crypto-only products, such as unique menu items or exclusive duty-free products. Perhaps last-minute first-class upgrades could also be offered in this way, if there
are unsold seats in that cabin.”
Cryptocurrency has potentially huge benefits for the air travel industry, but there are still growing pains to overcome. For now, we just have to patiently wait and watch the markets.
“Coin Toss” was originally published in the 8.3 June/July issue of APEX Experience magazine.