Air transport industry examines blockchain that could boost revenue by $40bn

Air transport companies are investigating the use of blockchain to manage the logistics associated with aircraft parts, forming an industry alliance.

Including air transport industry-owned IT supplier SITA, the MRO Blockchain Alliance includes suppliers in the aircraft maintenance, repair and overhaul (MRO) chain.

According to PwC, the technology has huge potential financial benefits for the sector. Its research has revealed that the use of blockchain could increase the aerospace industry’s revenue by as much as 4%, or $40bn, while cutting MRO costs globally by $3.5bn.

The MRO Blockchain Alliance will investigate the technology’s potential to be used industry-wide to track, trace and record aircraft parts.

As well as SITA, launch members of the alliance include Bolloré Logistics, Cathay Pacific, FLYdocs, HAECO Group, Ramco Systems and Willis Lease Finance Corporation..

A proof of concept is being worked on to demonstrate the use of blockchain to digitally track and record the movements and maintenance history of parts across a wide number of suppliers.

According to SITA, there is currently no global database, incomplete data-sharing and only partial digitisation in this sector. “The alliance believes the use of blockchain will simplify and speed up parts tracking while enabling the secure sharing of information between industry stakeholders,” it said in a statement.

Matthys Serfontein, president of air travel solutions for SITA, said the initiative is part of SITA’s ongoing exploration of blockchain. “In an industry as interconnected as ours, the ability to share and record common data in a secure way without giving up control of that data is fundamental to driving new efficiencies in air travel,” he said. “This is particularly true for the MRO sector.”

According to SITA, the air transport MRO industry processes 25 billion parts from about 20,000 suppliers, helping to ensure that 144,000 flights go ahead each day.

The alliance will embark on an initial planning phase, with the first proof of concept expected in the second quarter of this year.

Although blockchain is best known in the financial services sector for its role in enabling bitcoin to become a reality, the distributed ledger technology is also being used to improve logistics in multiple sectors. It can track and trace the chain of custody between different parts of a supply chain, and because everyone in the supply chain can view and trust the transactions posted, blockchain can reduce the time required for reconciliation and enable faster processes.

For example, IBM and Danish shipping giant Maersk are using blockchain to digitise transactions in the global shipping industry, which is a huge market, with about 90% of the world’s trade carried by sea.

They have applied the technology to enable transparent and real-time exchange of supply chain events and documents. Each participant in the trade can view the progress of goods through the supply chain – including the status of customs documents, bills and other data – but no one can modify or delete records without the consensus of others in the network.

And in 2018, DHL and Accenture completed a proof of concept for blockchain’s use in the pharmaceutical supplies sector.

The project saw the companies apply the technology to track pharmaceuticals from their manufacture through to their prescription to patients. This is important because, according to Interpol, about one million people die each year because of counterfeit medication, which makes up an estimated 30% of pharmaceutical products sold in emerging markets.