Airlines are already looking at
reinventing loyalty through blockchain.
A New Role for Intermediaries in the Blockchain-Based Loyalty Game?
Camino’s Anke Hsu, whose company is building
a “layer one blockchain” for travel said that because every organization or
business unit has one voice on such a chain, it creates a level playing field
between large and small players in the industry. It will also force
intermediaries in the travel business, such as travel management companies and global
distribution systems, to change—but not disappear, despite blockchain’s
reputation.
“Blockchain tends to eliminate the
middleman but I think we still need intermediaries,” she said. “We see that in
other industries. In the finance industry there are new intermediaries evolving
that facilitate interactions but there will be an adaptation. We will have so
many more opportunities to collaborate in payment, settlement and in loyalty.”
Nick Price said that intermediaries will not
only be able to offer travelers a travel identifier that can be used for the
purchase of travel products, “They will also be able to offer a digital space
that is under the sole control of that traveler to collect artefacts associated
with their travel e.g. reservations, digital keys, loyalty points,” he said. “That
cumulative repository would not be able to be mined by anyone else but if a
company said I am good at making use of this on your behalf would give me
permission to do that, then that is when you see the opportunity for different
sorts of relationship.”
In July this year, the airline Etihad announced
EY-Zero1, a first foray into the world of non-fungible tokens (NFTs), a blockchain-based
proof that the holder owns a particular object or asset, either in the digital
realm or the real world.
Under the Etihad scheme, investors and
aviation geeks alike could buy one of 2003 limited-edition 3D aircraft models
for $349 and have their ownership identified using the power of the blockchain
through an NFT. Not only did successful purchasers get the plane model, they
were also granted immediate silver membership of the Etihad Guest loyalty program
for a year. The airline pledged that all money raised from the sale of the NFTs
would be used to procure sustainable aviation fuel during 2022.
“NFT ownership can build new tiers of
customer loyalty, bringing different benefits, access to real and virtual
events, reductions in flight prices,” said Anke Hsu of Chain4Travel, a company
which is in the process of building a blockchain dedicated to the travel
industry called Camino, from the Spanish for “the way.”
Camino is a “layer one blockchain,” intended
to be a base platform on which other applications are built. The Camino test environment went live in
March and will go fully live in Q4 this year.
“We will be the shared infrastructure of
the travel industry,” said Hsu, adding that Camino is intended to be owned and
managed by travel industry partners. The advantage of keeping it within the
sector is that transaction fees can be kept low and those using the blockchain
know and trust the other players involved.
Hsu likens the current time in travel
blockchain to the heady days of the early internet in the 1990s.
“Now is the time to start working with the
technology and start exploring the opportunities of a peer-to-peer network,”
she said. “It is open to every travel player who wants to become a travel
validator.”
Chain4Travel is working with German
carrier Lufthansa to extend its Miles and More loyalty program into the long
tail of shops around the world, giving loyalty members access to discounts in a
wider range of retail outlets than ever before. The retailer uses the
blockchain to make it simple for them to recognize their customer as a loyalty
program member and, crucially, to enable the transaction to happen.
Hsu believes many more loyalty tokens will
start to appear. “We could have a world where every company has its own
cryptocurrency and can incentivize that loyalty token,” she said. She also sees
uses for blockchain-based smart contracts in automating corporate travel
agreements.
It’s not just airlines that are looking at
blockchain solutions. Travala, founded in 2017, is a blockchain-based hotel
booking platform in which loyalty plays a key role. Users can book more than
2.2 million properties on the platform and pay in either cryptocurrency or
traditional currencies and receive a 2 percent “giveback” in the form of the
platform’s own native AVA cryptocurrency, which can be used to buy anything
available on the Travala platform.
Houston-based Pinktada, meanwhile, is building
a marketplace for hotel room nights that sits between refundable and
non-refundable using NFTs. Travelers search for and book a hotel room on the
Pinktada platform which is then turned into a room night token secured through
the blockchain. The hotel is paid immediately. If the traveler’s plans change,
the token can be resold on Pinktada, creating a secondary market.
Travel managers are beginning to look at
the possibilities offered by SSI. Price said that despite being at early stages
he is working on a large-scale proof of concept around seamless travel in the
corporate world which has elements of loyalty within it.
TravelScrum’s Gene Quinn said SSI-based
loyalty is only a matter of time, and travel managers should be thinking about
how it will impact their programs.
“It is not only feasible, it is going to
happen.”
GO BACK TO PART 1: Can Self-Sovereign Identity Create a Shared Space for Supplier Loyalty & Corporate Travel Programs?
Re-read part one in
this series of how new technology platforms have the potential to
integrate the often uneasy relationship between corporate and travel
supplier loyalty.
GO BACK TO PART 2: The Individual at the Center of the Universe
Check out part two of
this series on self-sovereign identity and how it may be changing how
corporate travel integrates with supplier loyalty programs.