Can a blockchain-based ticketing infrastructure deliver real world revenue results? For Russia’s S7 Airlines there are a million reasons to believe the answer is yes. The carrier announced that it hit the one million dollar monthly revenue mark on its platform for the first time in July.
Thanks to this new technology, now it’s easier for our agents to work directly with the airline, which allowed us to expand our own S7 Airlines sales network. Within this year, we are planning to deploy first online agents, whose work would comply with the NDC standard, on the platform.– Ekaterina Dmitruk, S7 Group Sales Director
The million dollar threshold is significant in that it demonstrates the technology can operate at a decent level of scale. But the carrier also did $1.8 billion in revenue in 2017 (and likely more in 2018; the numbers are hard to find). A million dollars in a month is less than one percent of the carrier’s income. The carrier also disclosed that bookings on the platform are up tenfold since January.
S7 notes that the new platform, built using the Ethereum protocol and on Hyperledger fabric, connects travel agents, not consumers, into the reservations system. It reduces processing time for tickets and the paperwork involved in settlement. Payment is processed when the booking transaction occurs, rather than at a future settlement point. This is good for the airline in avoiding risk and makes things somewhat easier for the agencies, avoiding significant credit checks or large deposits with the airline.
The good results of our project with S7 Airlines shows that the blockchain technology creates value and is largely decisive for the B2B market. Agents left behind the guarantees and deposits, reduced transaction costs and now can make payments 24/7. We see great potential in the use of smart contracts and external business logic in accounting and paperwork in various sectors of the economy. Alfa-Bank will continue going in this direction with S7 Airlines.– Pavel Ryazanov, Director of Transaction Business at Alfa-Bank
As a private blockchain fabric the S7 implementation avoids many of the transaction scalability challenges associated with public versions of the technology. This also means slightly harder on-boarding with some potential growth opportunities. Integrating additional banks, for example, might prove challenging given the initial development work ties so tightly with Alfa-Bank. If the platform is tied to a single bank is there a specific value proposition that blockchain delivers better, faster or more reliably than other technologies might?
In addition to the travel agency link S7 has experimented with other blockchain-related transaction in the past. The carrier performed an aircraft refueling in August 2018 driven by blockchain “smart contracts” in cooperation with with the operator Gazpromneft-Aero and Alfa-Bank. The transfer of funds from the airline to the supplier was completed in 60 seconds, minimizing credit risks between the parties.
The part where the booking transactions don’t really need to be processed on a blockchain for security or efficiency is just part of the fun here. Some vendors admit that their private blockchain solutions can be easily implemented on other platforms. The others are mostly in denial. But it does keep the industry interesting.
More on Blockchain in aviation
- Singapore Airlines’ Krisflyer Blockchain Bullshit
- Loyalty Live: A peek inside the Blockchain-Loyalty world
- Air Canada’s blockchain play: Less than meets the eye
- IATA Coin: A blockchain play by and for the airline world
- Emirates Skywards, Loyyal bring blockchain loyalty to life
- Blockchain sales hit the million dollar mark for S7 Airlines