Consulting Firm EY Trials Direct Blockchain Travel Bookings With American Airlines
According to Skift, EY is the corporate buyer who is piloting a new partnership between American Airlines and a blockchain company. The partnership is testing a new way of booking flights that would eliminate the need for middlemen such as travel agencies and global distribution systems in the future.
According to two people familiar with the matter who asked to remain anonymous, the consulting business is collaborating with Winding Tree, a travel marketplace that makes use of blockchain technology to facilitate transactions. Because EY has more than 310,000 employees worldwide, the trial will have a considerable impact on the company’s global operations.
Winding Tree announced its partnership with the airline on November 16, just in time to create a big statement ahead of the Global Business Travel Association’s conference the following day, which took place on November 17. According to the statement, the agreement would “provide workers of one of the world’s leading corporate travel purchasers with direct access to American’s content on a global scale.”
According to the Business Travel Network’s 2020 Corporate Travel 100, EY was the fifth largest spender on flights in the United States in 2019, spending $346.8 million. The airline and blockchain technology company saw an opportunity in announcing their news just in time for the Global Business Travel Association’s first major event in a long time, but they did not identify the corporate travel buyer who was behind the announcement.
‘From what I gather, this is a proof of concept that has been done from a leisure viewpoint rather than a business standpoint,’ a source in the sector told Skift.
“Will there be a natural movement into some of their business programs?” says the analyst. They went on to say that the consultancy may look to introduce blockchain bookings in some of its smaller markets, for flights that aren’t necessarily part of a larger managed corporate travel program, or for flights where it would be easier to implement blockchain technology. Is it possible that they might do it on the London to New York route? Who knows what will happen.
The insider went on to say that if this were to happen, it would be a game changer since it would have a significant influence on the travel agency and worldwide distribution networks. The high-profile relationship will have ramifications for the whole business travel industry as a whole. Winding Tree already has a relationship with Air Canada, but it is the scale of American Airlines that distinguishes this partnership.
Blockchain is a digital ledger that is decentralized, distributed (and sometimes public), and it records transactions by storing data in “blocks” of information.
It’s similar to an open-source supply chain, and it has the potential to provide more transparent and precise end-to-end monitoring in principle, making it feasible to trace assets from the point of manufacture to the point of distribution or usage by the end user. In other words, a more straightforward approach to doing business.
This travel buyer will utilise Winding Tree’s decentralised marketplace platform to book travel plans directly with American Airlines as part of the agreement, according to the release. According to a Winding Tree spokeswoman, the agreement “eliminates” the requirement for a worldwide distribution system, as well as the necessity for a corporate travel agency in certain instances.
If a trip buyer desires the assistance of a travel management company, Winding Tree may also accommodate that need. As a consequence, the airline will be able to save money on its distribution expenses. Corporate travelers, on the other hand, save money since they do not have to pay travel agency costs. Airlines may not admit it, but it’s possible that this is more about business models than anything else.
When it comes to providing customers with access to American Airlines’ content in the most convenient manner, Neil Geurin, managing director, digital and distribution at American Airlines, said in a statement released with the announcement: “We’re always looking for innovative ways to give our customers access to American’s content in the most convenient manner for them.”
“Winding Tree offers a friction less way to reaching this aim, and we look forward to continuing to collaborate with them in the future.”
Another advantage of this new system is that it provides travel purchasers with more transparency into exactly what they are purchasing from the airline. “The company has complete insight into the itinerary and all of the expenditures that were associated with it,” the person said.
It would be reported back to the company for upgrades, lunches, and other expenses. “This is also beneficial to businesses when negotiating with airlines.”
Even while travel purchasers now have more visibility into their whole trip costs, there is now less opportunity for comparison shopping. This is an area in which some travel technology businesses would want to see more activity.
Sabre, for example, is developing a “new airline storefront” idea that will make buying an aircraft seat as easy as shopping in a supermarket in the future. Meanwhile, ATPCO, a provider of airfare data, is working to improve its next-generation storefront system.
Agents and other sellers may use the tool to classify and organise what the company considers to be increasingly complicated airline pricing. “How about cross-shopping?” says the narrator. The issue and worry raised by Scott Gillespie, founder and CEO of consultancy tClara, is very genuine in my opinion. Corporations appreciate the notion of direct link, but they don’t like the thought of their passengers not being able to compare costs with those offered by other providers. “They know which airlines they want to fly with, end of storey.” Gillespie went on to say that he was dubious about the need of a blockchain-based solution.
According to him, “it raises the issue as to what the additional value of using a blockchain-based platform as opposed to direct link is.” A number of airlines have already entered into direct discussions with corporate entities. To take advantage of unique offers from Lufthansa Group, Siemens, for example, makes use of what is known as the New Distribution Standard.
In addition, Lufthansa Group became the first large aviation firm to join with Winding Tree, which happened in 2017. Despite the fact that “I’m not sure how it separates itself in a meaningful manner from normal technology,” Gillespie predicts that the business model will be more important than the technology.
Following the announcement by American Airlines, it is possible that greater pressure will be given to travel companies to become participate. They may discover new responsibilities to play in the process of tying together the many blockchain-booked travel components of a business trip.