Is Cryptocurrency a viable payment alternative for the Aviation Industry?
I’m sure everyone has heard of bitcoin by now and if not, where have you been? Not a day goes by without a news story on the rise or the fall of one of the many coins or tokens.
Depending on who you talk to, it’s either the currency of the future or something to stay clear well clear of.
Cryptocurrency (sometimes called Crypto or Digital Currency) is a digital asset that can be purchased, sold or traded without the need for a central monetary authority, such as the government or the bank.
It’s a peer-to-peer system that can enable anyone anywhere to send and receive payments. There are no physical coins or bills and they are not tied to anything of value in the real world, making the value fluctuate erratically, which you’ve likely seen.
Many of the cryptocurrencies are powered by Blockchain technology (which we will cover in a separate article) but for the purpose of this one, it effectively enables the maintenance of a robust ledger of transactions, accounts and ownership. This ‘encryption’ to provide security and safety is how Cryptocurrency got its name.
The first cryptocurrency was Bitcoin, which was founded in 2009 by Satoshi Nakamoto and remains the most widely used and well known today. It was designed to circumvent traditional banking after the 2008 banking collapse and after starting life at zero when it was introduced, reached its peak in November 2021 at $68,789.
In 2014 AirBaltic became the world's first airline to accept Bitcoin payments for its flight tickets, a move which has been recently followed by Emirates, who want to embrace advanced digital solutions such as cryptocurrency, blockchain and the metaverse!
There was also a seismic shift in September 2021 when UATP announced a partnership with BitPay. The Universal Air Travel Plan is a global payment network, owned and run by the world's airlines and will now enable cryptocurrency payment options for over 300 worldwide operators such as British Airways, Lufthansa, Air New Zealand, Etihad, Southwest, Turkish Airlines and many more.
Alternative Airlines is an Online Travel Agency (OTA) that is also fully embracing cryptocurrency. Covering over 600+ airlines globally, in 2019 they wanted to expand their existing payment methods to serve a wider audience. They partnered with Digital Flight Solution Provider - UTrust to serve the crypto universe, letting travelers book flights and checkout using the cryptocurrency of their choice.
There is clear movement on the B2C (Business-to-consumer) front, especially when buying plane tickets but it’s yet to be seen how cryptocurrency will play a part in other areas of the industry.
There are many providers making it easy for businesses to accept Cryptocurrency payments, so I’d expect more B2B (Business-to-business) activity in the coming years, especially with eCommerce growing in the parts aftermarket space for example - adding a payment gateway for crypto will be adopted by many but I’d imagine it will take a while to see substantial activity.
Looking further ahead, what’s to stop Aviation having its own digital currency to enable businesses to transact quickly and efficiently together.