Perhaps no airline sees itself as an innovator more than airBaltic. Committing to, and then accelerating the transition to operating a modern, fuel-efficient fleet is one aspect of that ethos. So, too, is the expansion of its route networks, even establishing a hub in a foreign secondary market.
New digital technologies are also part of the company’s future. Since 2014 the carrier has accepted bitcoin for the purchase of airfare, a move described at the time by CEO Martin Gauss as “part of our innovative approach to service.” Over the past year that spirit of innovation extended into non-fungible tokens (NFTs) where airBaltic perhaps has lost its focus.
The company’s latest move – to issue 10,000 more NFTs tied to its loyalty program – raises further questions about whether the airline is innovative or simply chasing a shiny buzzword.
Questionable success so far
A year ago airBaltic announced plans to mint a series of NFTs related to its fleet and destinations. These were “part of its marketing strategy, helping airBaltic to gain global recognition, helping to promote tourism in Latvia.” The company minted 190 NFTs so far. Fewer than half appear to have sold, based on a review of the company’s OpenSea profile.
Only a handful have seen secondary transactions (i.e. sold by the initial buyer), and those appear to have generally been for less than the amount initially paid. The total market for airBaltic’s existing NFT portfolio comes in at 3.2 ETH, just over $11,000.
Against this backdrop, which Gauss describes as “a high interest in our initial NFTs,” then company plans a massive expansion of its NFT strategy.
NFTs as a proxy for loyalty
The “Planies” NFT collection, due to launch in May 2022, promises 10,000 unique cartoon aircraft, “with different traits, such as mouth, eyes, wings and engines etc.” The company will sell Planies from a dedicated website, with trading on the secondary market facilitated via OpenSea. Planies NFTs will also be used in the company’s advertising efforts and featured in the on-board entertainment system.
Unlike the airplane/destination collections, Planies will at least include additional benefits for purchasers. At least that’s the plan. Gauss explains that the newest set of NFTs will also provide “additional benefits like frequent flyer points or certain vouchers” to add value. Of course, those points or vouchers won’t be reissued for a secondary sale. And the company could just sell points or vouchers directly today, without the NFT distraction. Indeed, many airlines around the world already do precisely that.
In that context, the Planies NFT effort should more be seen as an elaborate and environmentally unfriendly “first step towards preparing the airBaltic Club loyalty program for crypto tokenization in the future,” than a smart evolution of the program infrastructure or technology.
Potential upside for the company does exist vis-a-vis the psychology of someone buying in to the NFTs and then skewing future travel purchases. But that will be much harder to quantify, especially as the NFTs potentially transition to secondary owners.
Beyond the frequent flyer program
Perhaps even more confusing in airBaltic’s NFT strategy is how the carrier seems keen to extend it beyond the loyalty program. Gauss indicates tokenization could become more pervasive throughout the operation, though it is unclear how that would work:
With Web 3.0 arriving shortly, airBaltic is preparing to develop token-based economics for its frequent flyer program. The NFT technology will help to further digitalize processes not only within our loyalty program, but also in various other airline processes, thus reducing costs and making our work easier.
The idea of using blockchain for tracking and documenting other aspects of airline operations is not new. Maintenance logs or equipment tracking are two areas that show the most promise as they involve multiple parties and potential for limited or no-trust data collection. But even there the use case is far from a sure thing. And those concepts are far from the “NFT technology” that Gauss describes in the announcement. Or he’s mixing buzzwords (calling it “Web 3.0” rather than “web3” is an indicator of that), which probably is not a good sign.
Innovation can be good for the industry. And commercial aviation certainly is not known for moving quickly to adopt new technologies or modernize its systems. But that doesn’t mean blockchain and NFTs are the correct solution. They barely qualify as that in industries that are good about adopting new technology. Expecting them to solve problems that don’t really exist here is a highly questionable play.
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