Airlines and networks increasingly look to cryptocurrencies to save money and time
Can bitcoin fuel aviation around the world?
Bitcoin, the digital currency independent of central banks, countries and regulatory authorities, can be a great asset for aviation and save airlines significant amounts of cash, analysts say - and some carriers have already embraced it, including Japan's Peach and, this month, the US airline Surf Air, which announced it would support bitcoin and ethereum payments for its monthly membership and charter services.
"Digital currency has been on our radar from the very beginning and we are excited to provide our members with another quick and seamless way to do business with Surf Air," the chief executive Sudhin Shahani told CoinDesk.
Airlines – particularly smaller, regional ones – are no strangers to the cryptocurrency world, with a number having begun accepting bitcoin over the years. Indeed, the airline industry has also moved to explore applications blockchain, including in areas such as ticket disbursement and maintenance tracking.
Universal Air Travel Plan teamed up with Bitnet as a payment processing partner more than two years ago to allow it to offer the ability to accept bitcoin payments in a simplified manner to its network of more than 260 airlines, according to Bloomberg.
As a global industry, aviation is highly dependent on foreign exchange for nearly every part of its operational cycle - from flight operations, maintenance, fuel expenses - every phase needs cross border remittance. While managing cash can be a challenge, transferring money peer-to-peer and bypassing a central bank in New York or Paris can help conclude transactions in minutes, as opposed to days.
“There will be no more delays by bank holidays, weekends, or long festival breaks,” said Mark Martin, the chief executive of Dubai-based Martin Consulting. “Imagine the possibility of remitting money to a handler, in the same way one downloads content on via Torrent today - without downtime, the transaction concludes.”
Transactions for bitcoin are made by San Francisco based CoinBase, which are recoded in a blockchain, a form of an official ledger. As a digital currency, bitcoin exists in a digital wallet, which resides in the cloud and can be connected to a bank account. Bitcoin can be bought by a bank transfer, Visa or a MasterCard. Some cities, such as Singapore, London and Glasgow, have bitcoin ATMs that allow the transfer of bitcoin to cash. Additionally, more and more companies are starting to accept bitcoin such as: Tesla and Microsoft among them.
For bitcoin to work effectively in aviation manufacturing, it needs firstly a backer that is large enough with a global presence and all the corporate governance checks and balances in place. Plane makers such as Airbus, Boeing, Bombardier, or Embraer can be good candidates as they have customers in nearly every part of the world. “These companies constantly upsell, maintain aftersales support and customer services with nearly all of its aircraft owners and in such scenarios continuously maintain active dialog and post-sale revenue generation,” said Mr Martin.
Another way for bitcoin to work in aviation is to be embraced by the right channels, audiences, and governments. But, there are still challenges to cryptocurrencies as an alternative remittance model, especially if it is not recognised by central banks or regulators. It can also be used for terrorist and criminal activities.
“The global reported cases of money laundering have tripled,” said Mr Martin. “Existing channels continue to see an alarming number of transactions taking place; so clearly it isn’t the medium that’s the problem, it’s the intent that needs to be stopped.”
While bitcoin today, stands as a radical innovation along with Artificial Intelligence, machine learning and autonomous vehicles. It may need embracing rather than ignoring.
“Let's not burn the bitcoin concept on the “spit in the townsquare”, said Mr Martin.
“Mankind today is on the cusp of a whole new revolution that is digital and built on discovery in the same manner Aristarchus, Ptolomy, Copernicus, Galileo and Magellan worked towards.”