Is Blockchain Tech the Holy Grail for the Aerospace Industry?
The Holy Grail. The elusive relic is a pivotal component of Christian lore, serving as a beacon for worldwide scholars and treasure hunters (raider?) alike.
Whether your faith communes with the Grail's significance or not, the item remains an object of veneration and discussion to this day. Some movies have of course helped to feed the audience's imagination on the subject.
The quest and pursuit of such legendary totem evolved into the association of the term with something that's eagerly wanted or sought after. Every industry and walk of life has or has had a Holy Grail at one point or another. The Holy Grail in the fight against cancer. The Holy Grail for the soccer team. The Holy Grail for the aerospace industry. And so on.
This piece focuses on the latter.
Current challenges of the aerospace industry
Aerospace is one of the most heavily regulated industries in the world, and for good reason. The safety of passengers, crew, and many people on the ground depends on the proper maintenance of aircraft assets. Then there are the millions of jobs that depend, directly or indirectly, on this sector.
The scale and magnitude of the collaboration required to put an aircraft into the air really are quite striking. From the manufacturing of its parts, which might happen in distant corners of the world, the dispatching of these parts via freight (maritime, road, or both), the assembly, crew recruiting, training, administration, and so on, aviation represents a Herculean task of concerted determination to succeed. Heavy automation of the design and production process -including relatively new techniques such as 3D printing- and streamlined training methods such as next-gen flight simulators, etc. may shorten the turnaround of new aircraft and flying crews, but all these innovations come with a heavy price tag.
The aerospace industry as a whole was estimated to be worth around $838bn as of 2018. And the sector is growing apace. Conservative estimations put the demand for new aircraft over the next two decades at about 40,000 new machines. That means a whole lot of hours spent by a whole lot of people to make it happen. Designers, engineers, maintenance crews, pilots, cabin crew, frontline staff, and many more. And crucially, all these processes and operations generate data. A lot of data, that needs to be analyzed and used for better outcomes.
Blockchain technology has become a heavenly gift for many industries, due to its disruptive and transformative nature. Manufacturing, finance, supply chain, and many other aspects have received the blockchain treatment so far, and further implementation of this technology across many other facets of the modern world is only a matter of time.
Aerospace is not far behind in the blockchain race. The aviation industry tends to align rather well with what blockchain has to offer.
Blockchain is more than the sum of its parts: Redefining maintenance and aircraft financing
So the question arises: What can blockchain do for the aerospace industry? And is this technology really its Holy Grail?
The answers are as complex as the industry itself.
We mentioned the colossal amount of data generated during the process of designing, manufacturing, flying, and maintaining an aircraft. It may be the year 2019, but a lot of flying manuals, procedures, maintenance logs, etc. are stacked ceiling-high on printed pdf documents. This is not just inefficient; Written records can be easily tampered with, for instance. Maintenance entries can be backdated, or fraudulently signed off to pass an audit, for example, or simply cut corners. This is unacceptable and downright criminal.
Then there's the issue of counterfeit spare parts. Determining the provenance and legitimacy of aircraft parts is literally a life or death issue. In 1989 for example, Partnair Flight 394 came down off the coast of Denmark, killing all 55 people on board. Investigators determined that the cause of the crash was the use of counterfeit replacement parts. The aircraft in question, an aging Convair CV-580 model, had change owners multiple times and had been registered no fewer than seven times throughout its history, undergoing repairs and upgrades with what turned out to be inadequately manufactured parts.
This accident, in fact, starkly brought the deadly issue of counterfeit spare parts to international attention, prompting airlines to significantly tighten the regulations and safeguards surrounding the procurement process. It is clear that determining provenance and having a verifiable record of an aircraft's maintenance history is of vital importance to the aerospace industry. Blockchain technology can provide such security and traceability, due to its traits of transparency and immutability.
Blockchain functions much like a gigantic digital ledger, so a spare part would have a record for every time it moves through the system, all the way down the supply chain, and into the aircraft, so maintenance crews can tell at a glance when that part was manufactured, by whom, where it was used before, and so on.
Aircraft finance and leasing on the blockchain: A new way of doing business
Aircraft are valuable assets that can be priced anything from a few tens of thousands to several million. And these assets retain a lot of their value on the second-hand market. And again, one faces the issue of determining provenance. How can you, a potential buyer, be truly certain of the aircraft's history? Who owned it before? Was it ever involved in an accident, however minor? The Convair plane involved in the Partnair crash had changed hands no fewer than seven times and had been received a new registration every time. So knowing the exact and precise history of an aircraft is a crucial decision when deciding to buy, and also in determining its true value. Here, blockchain technology can also excel. At a glance, the buyer knows exactly where the aircraft has been, who flew it before and for how long, and a fair price can be negotiated in the secondary market.
Blockchain would also greatly enhance the aircraft leasing process. An estimated 23,000 aircraft are currently on lease to airlines and other entities around the world. When the lease ends, the leasing party must take a full inventory of every single part to ascertain its condition, which often involves dismantling the entire machine and put it back together. This is taxing enough for small aircraft. Think about the work involved in taking inventory of a Jumbo Jet! The accuracy and transparency of blockchain would streamline this process, as only those components showing more than usual wear and tear and those parts that need to be visually inspected according to regulations would require a closer examination.
Relatively speaking, blockchain technology is still in its infancy. It has been around for just over a decade, a mere drop in the ocean of technological evolution. Blockchain can be of great benefit to much more than aircraft maintenance and leasing records, however. Indeed, some airlines are already using this technology as part of their IT infrastructure. S7, Russia's second-largest airline, for example, uses blockchain for its ticket sale system. According to the airline, S7 has processed over $1m in ticket sales through its blockchain payment solution.
Other potential applications include passenger registration and identity services, which would help airlines to maintain and accurate an highly visible passport and visa management system. Or loyalty programs to facilitate the issuance of reward points and 'air miles', or whatever other reward tokens are utilized.
The versatility of blockchain technology really encompasses almost the whole gamut of aspects related to the aerospace industry, and in many ways, both poetic and practical, blockchain is this industry's Holy Grail.
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