New advancements in blockchain technology are taking the aviation marketplace by storm
When it comes to the business of flying, blockchain is certainly making its presence felt. According to new market research published by MarketsandMarkets, the aviation blockchain market size is expected to reach USD 1,394 million by 2025, which is a huge increase from USD 421 million in 2019, at a CAGR of 22.1 % from 2019 to 2025. Some of the key drivers that are influencing the growth of the aviation blockchain market are in increased traceability and transparency, multivariate applications of blockchain and reduction in cost and transactional complexities.
The airport segment is projected to grow at the highest CAGR during the forecasted period, as airports are focusing on digitalization and automating processes to increase the efficiency and pace of their operations. Blockchain is being used in cargo and baggage tracking, passenger identity management and smart contract applications. Storing passenger information on blockchain for biometrics and ID tracking/management also allows airlines and airports to enhance their security.
It is no surprise that China is expected to lead the aviation blockchain market in the Asia Pacific. Interestingly, Malaysia’s efforts in this regard have been recognized, and facial biometrics with blockchain capabilities have been used by Malaysia Airports Berhad to assist in matters pertaining to booking, boarding, and identifying passengers. According to PriceWaterhouseCoopers (PwC), when it comes to how blockchain can revolutionize maintenance operations, the savings could be massive. Efficiency gains enabled by blockchain could increase industry revenue by as much as 4 percent of US$40 billion, by cutting maintenance costs, by about 5 percent , or US$3.5 billion.
When it comes to aircraft maintenance, blockchain ensures routine efficiency as a continually updated ledger of each part’s condition and usage helps reduce time spent on a routine inspection, so asset utilisation can rise. It will also streamline heavy maintenance visits, saving days and coupled with predictive analytics, it can also allow aircraft operators to cut spare parts inventories. When it comes to spare parts, blockchain is also perfectly positioned to defeat mercenary parts resellers who mark up prices and increase hassles for airlines. Participants in a blockchain-powered aerospace ecosystem can cut out the middleman, reducing the cost to obtain scarce parts.
The wealth of information about a plane’s physical and electronic state, usage and maintenance can all be stored and updated in real time using blockchain technology, and this can have a large impact on how aircrafts are ultimately valued. With verifiable maintenance records, there is a huge potential to increase the end-of-service value of aircraft. When it comes to leasing planes, the aircraft leasing market is also poised for enormous changes as the transparency being offered by blockchain-related records will increase residual values for the planes in stock. One will be surprised to learn that about half of the global commercial aircraft fleet of 23,000 is leased.
According to PwC, the US is the industry’s largest market is perceived as the global leader in blockchain, but China is predicted to overtake it by 2023. The stakes are high and the impact for airlines is potentially massive. With aircraft configurations and maintenance histories being continually updated, airlines can finally bring ‘trust’ back into play.
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