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Report

Teaser, summary, work performed and final results

Periodic Reporting for period 1 - Biztribution (Towards a fully decentralized distribution for next generation of travel and tourism distribution)

Teaser

Summary

The air travel distribution (booking and selling of airline tickets and related products to customers) is dominated by an oligopoly of 4 Global Distribution System (GDS) companies. They provide a global IT-based reservation network to mediate between travel agencies, airlines and customers, charging airlines a fee of around 5â‚¬ per transaction, which poses a great pressure on airlines profitability. GDSs enable exclusive services such as interlining, extra luggage, seat selection and catering. For travel agencies they give access to a very wide offer of all the airlines operating through the GDS with just one system integration. However, GDSs pose a high risk to market competition, since they are being investigated or sued in the EU and USA for their breach of antitrust rules.
Airlines need to cut down distribution costs and regain control over their services and customers so that they can offer better personalized services and cross-selling. Although airlines have tried to avoid GDSs by reinforcing their direct sales channels, they have a great overhead to develop and maintain their own IT solutions in terms of workforce needed, IT resources and time. The result is that distribution through GDSs still represents 55% of the air travel distribution limiting innovation and new markets creation in an evolving industry oriented towards air retailing.
biztribution reinvents the industry by creating a new revolutionary automated and simple distribution model for the air travel and tourism sector. Based on blockchain technology, we enable airlines to recover governance over their content and customers, creating a shift of paradigm towards a fully decentralized scenario, translating into more efficient operations and significant reduction of distribution costs by avoiding overheads and intermediaries.
In our model, all actors can provide and access content across a distributed blockchain network, resulting in benefits that percolate to the whole industry.

Work performed

Technical feasibility: We have detailed our initial architectural design. We have detailed the system architecture tests done so far and those to be tackled during the project in 3 different tiers, proving that our system is prepared in terms of latency and transactions per second to deal with high demanding environments. We have defined the parameters for the demo environment & execution of operational validations. We have also defined a technical plan extended over 24 months and organised into 5 work packages and estimated the needed resources to develop the technical activities and the underlying risks.
Commercial feasibility: We have identified the potential market for biztribution, our targeted customers and users, and the key partners to be involved. A commercial plan has been carefully established, selecting key regions at three stages and determining the barriers to entry. The pricing strategy has been confirmed. Biztribution has built a dissemination and communication plan to raise awareness amongst every potential customer, which includes the organisation of workshops, attending tradeshows and an increased presence in specialised media. According to our preliminary IP assessment, we have freedom to operate and we are analysing the patentability of our solution, in particular the cache subsystem. We have also identified and approached potential partners for validation and potential sales partners. We have even increased the scope of our core team with the involvement of a senior advisor with 20+ years of experience in the airlines sector to reinforce our credibility and contacts with airlines.
Financial feasibility: We have analysed and forecasted our overall costs related to the finalisation and commercialisation of biztribution and built the best revenue model. We have estimated the number of airlines, markets and passengers we can enrol and analysed the financial risks. We have also built a 5-year financial forecast (2020-2024).

Final results

- Full N to N travel & tourism content distribution solution offered as blockchain-as-a-service (BaaS) in a fully distributed community ecosystem with no middlemen.
- Scalable solution for full adoption. Innovative aggressive caching mechanism that increases x100 the scalability and performance of blockchain by adding cache technology.
- Blockchain nodes can be hosted in different cloud providers. We reached agreements with worldwide main infrastructure providers to deploy biztribution nodes as cloud instances in their cloud blockchain offering.
- Scalable business deployment relying on specialized IT providers and consultants to scale up the integration with current IT and legacy systems from airlines and travel agencies.
- Protects players and passengers against defaults of airlines or travel agencies.
- 40% reduction of distribution costs thanks to its fully decentralised distribution model.
- Security and privacy by design. Full privacy between parties, traceability and transparency are ensured through zero-knowledge proof. Permissioned blockchain with dedicated endorsement and consensus.
- Transitionable and interoperable. It preserves compatibility with present systems.
- Practical alternative to solve antitrust issue by well-established GDSs.
- Increases the resilience against outages thanks to its distributed nature.
- Reduces bank guarantees to be provided by travel agencies to IATA (BSP).
- Returns control of the value chain to the airlines enabling them to deploy their own view of contents and customized offers, codeshares and interlines among coopetitors.
- Increases the number of airlines (e.g. long tail, low cost) that can benefit from distribution systems.
- Grants transparent and real-time access to governments/regulators to flight and passenger details (e.g. boarding lists to fight crime and flight cost details to avoid airlines fraud with insularity subsidies).