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Reducing Transaction Costs in Flight Bookings via Blockchain

Sector: Tertiary sector · Industry: Tour operators and travel agencies · Organisation: Air New Zealand · Maturity level: Pilot

Air New Zealand explored the use of distributed ledger technology in its ticket sales process together with Swiss blockchain platform Winding Tree. The goal was to significantly reduce transaction costs for consumers and travel agencies while simplifying the booking process. Reports indicate that transaction costs for users making blockchain-based bookings can be reduced by up to 20 percent.

Documentation status

Description

Air New Zealand, in collaboration with the Swiss startup Winding Tree, has explored the possibilities of blockchain technology for its own ticket sales process. Winding Tree operates a decentralized travel ecosystem that enables airlines and hotels to offer their products directly without expensive intermediaries like Global Distribution Systems. According to reports, travellers booking via this blockchain-based platform can save up to 20 percent on transaction costs. The project was in the exploration and evaluation phase; a full live operation was not confirmed.

Air New Zealand, one of the best-known airlines in the Asia-Pacific region, partnered with Winding Tree, a Swiss travel startup specialising in blockchain, to investigate how decentralized technology can make the airline’s booking process more efficient. Winding Tree offers an open, decentralized platform based on distributed ledger technology that allows travel providers to distribute their inventories directly to travel agencies and end customers without relying on costly Global Distribution Systems. The partnership was announced in 2017 and focused on exploring concrete use cases for cost reduction and process improvement. According to available reports, using the blockchain-based booking solution could reduce transaction costs for consumers by up to 20 percent. The exact project status and further technical details about the blockchain technology used were not publicly specified, so the initiative is classified as an exploration and pilot project.

Perspectives

B2B — organisations perspective

For travel agencies and other B2B partners, the blockchain-based booking platform offers the opportunity to access Air New Zealand's flight offerings directly and without the intermediation of costly GDS systems. This reduces booking fees incurred and can lead to more competitive prices for end customers.

B2C — consumers perspective

End customers who book their flights via blockchain-based platforms such as the Winding Tree ecosystem can benefit from lower transaction costs as intermediary fees are eliminated. The booking experience becomes more transparent through direct access to flight prices without mark-ups from third parties.

Employees perspective

Employees in booking and IT departments are required to familiarise themselves with the basics of decentralized booking platforms and to adapt or integrate existing systems accordingly. The introduction of new technologies requires training and close collaboration between technical teams and operational booking staff.

Benefits

General

B2B — organisations

B2C — consumers

Employees

Challenges

General

B2B — organisations

Employees

Technology foundation

The project is based on the Winding Tree blockchain platform, a decentralized travel ecosystem built on distributed ledger technology. This technology is particularly well suited to the travel sector because it can process booking transactions without central intermediaries, eliminating intermediary fees and enabling a direct connection between airline and end customer or travel agency.

Implementation examples

Air New Zealand and Winding Tree: Blockchain-supported cost reduction in ticket sales

Traditional booking channels via Global Distribution Systems cause significant transaction costs, which are ultimately passed on to airlines, travel agencies, and end customers. Air New Zealand wanted to investigate whether decentralized blockchain platforms could structurally reduce these costs.

In 2017, Air New Zealand partnered with the Swiss blockchain startup Winding Tree to explore the application of distributed ledger technology in its own ticket sales process. The aim was to reduce transaction costs and make the booking process more efficient through decentralisation.

In 2017, Air New Zealand announced a collaboration with Winding Tree, a blockchain startup specialising in the travel industry based in Switzerland. Winding Tree develops a decentralized platform that enables travel providers such as airlines and hotels to offer their inventory directly via a blockchain-based infrastructure, thereby bypassing costly intermediaries like Global Distribution Systems. Reportedly, transaction costs for bookings via this platform can be reduced by up to 20 percent. The project was in the exploration and evaluation stage; a full live implementation or scaling was not publicly confirmed. The partnership was part of a broader industry development in which several airlines explored the possibilities of blockchain technology for the travel sector.

Reportedly, transaction costs for consumers using blockchain-based bookings can be reduced by up to 20 percent (source: meinstartup.com, travelnews.ch).

The central issue of high intermediary fees in the traditional booking process was to be addressed by using a decentralized platform without costly middlemen.

Tags

Transaction costs, Flight booking, Decentralisation, Smart contract, Travel industry, Winding Tree, Blockchain platform

Sources

  1. Air New Zealand prüft Blockchain-Technologie
  2. Air NZ und Swiss Travel Platform Winding Tree in Blockchain-Partnerschaft
  3. Was Blockchain in der Reisebranche bewirkt
  4. Werden Blockchain und ChatGPT die Tourismus-Industrie nachhaltig verändern? Teil 1