Building the Blockchain Airports of the Future
I fly a lot. Whether it’s for business or pleasure I usually find myself up in the air. According to my TripIt account, I have flown over 2 million km to 100 different cities (and therefore airports) in 50 different countries, during the past decade.
Unfortunately, due to the unpredictability of our local airport, I have yet to get to get my departure dynamics down to a Clooneyesque science. The following is a brief recount of the major steps (and countless bottlenecks) needed to fly out of KWI:
Departing the Current Way
T-2 Hours: Leave home with driver
T-1:45/1:30: Bottleneck 1 (BN1) — Passenger Curb Side Drop Off
T-1:40/1:20: Bottleneck 2 (BN2) — Airlines Check-In/Baggage Check 1 (Checked Luggage)
T-1:20/1:00: Bottleneck 3(BN3) — Security Check 1/Baggage Check 2 (Carry-On)
T-1:00/0:45: Bottleneck 4 (BN4) — Passport Check
T-0:55/0:35: Bottleneck 5 (BN5) — Customs Check
T-0:50/0:25: Bottleneck 6 (BN6) — Security Check 2 (GATE)/Baggage Check 3
T-0:45/0:15: Bottleneck 7(BN7) — Ticket Check 1(Boarding)
T-0:40/0:05: Bottleneck 8 (BN8) — Ticket Check 2 (Pre-Bus)
T-0:40/0:05: Bottleneck 9 (BN89) — Ticket Check 3 (Pre-Plane)
Now obviously there have to be a few safety checks, but why haven’t our airports kept up with new simple technologies the way our restaurants, taxicabs and cinemas have? This cumbersome process also begs the question — why do we need airports anyways?
The quick answer is 1) Taxes, 2) Retail Income and 3) Security. All of which, should be easily replaced with technology as I will demonstrate later.
During the 1970s, my mother was a ground hostess for Kuwait Airways, an airline that would go on to get hijacked quite a bit. SO yes, there is a serious security concern, however, I am also old enough to remember a time where passengers could walk right up to the gate without having their dignity stripped from them. For the millennials reading this, I did this exact same seamless process while flying domestic across the USA pre September 11th, 2001 and in Australia in the summer of 2003:
Departing the Pre-9/11 Way
T-0:45-Leave home in cab
T-0:30- Bottleneck 1 (BN1) — Passenger Curb Side Drop Off
T-0:25/0:20- Bottleneck 2 (BN2) — Airlines Check-In
T-0:20/0:15: Bottleneck 3(BN3) — ID Check/Security Check 1/Baggage Check 1(Carry-On)
T-0:15/0:10: Bottleneck 4 (BN4) — Ticket Check 1(Boarding)
T-0:10/0:05: Bottleneck 5 (BN5) — Ticket Check 2 (Pre-Plane)
In all honestly, I frankly do not see why the process for domestic flight should be any different than international flight. Next, if we simply consider the number of bottle necks today vs. the number of previous bottle necks, we notice that today’s excessive number would easily make my Operations Management Professor from Columbia cringe. (Hi Safwan)
Today my passport/ID is checked three times. My bags are checked three times, I pass through a metal detector twice and my ticket stub is scanned/check three times as well.
No wonder that today’s market size of the Airport Security Industry (part three of our quick answer) world wide is in the low double digit billions and forecasted to increase to 16 billion globally by 2024.
Moreover, according to the Duty Free Industry (part two of our quick answer) market leader, Dufry (which in which back in 2015 acquired World Duty Free for SFr3.8bn) the global duty-free industry is expected to grow to about $67bn by 2020, from an estimated $45.7bn in 2016. So far, duty free retail revenue plus security contract revenue is projected to be close to 80bn in the next three to five years. Now comes the largest revenue generator of all for airports — taxes.
According to Investopedia, Airport Taxes (number one from our quick answer)are levied on passengers for passing through an airport. The tax is generally paid for use of the airport (yes, all that amazing customer service), and is one of a number of taxes that are typically included in the price of an airline ticket. Often, the bulk of the fee is called the landing fee for the privilege of landing at a specific airport, is paid by the airline and transferred to the customer via the ticket price. These fees will vary greatly depending on the popularity of the airport. For example, to land at Heathrow Terminal Five, $120 of the price of my Kuwait Airways ticket are itemized as Airport Taxes (the devil is in the details after all). That’s $120 per passenger. Now, the busiest year ever recorded (in terms of passenger numbers) at Heathrow was in 2016 with 75.7 million (that’s almost the population of Turkey). The percentage of international passengers: 94% (71 million), the percentage of domestic passengers: 6% (4.6 million) and the percentage of business travelers: 34% (25.7 million). So roughly speaking, 75mn x $120 = $9 billion in tax revenue, and that’s only from one airport. Now keeping in mind that the UK has the highest APD (Air Passenger Duty) and assuming a Bell Curve distribution in terms of number of passengers and fees for the rest of the world’s 43,983 airports (over a third of which in the USA) then the total size of airport tax revenue could easily be in the trillions.
The world’s first airport was College Park Airport (KCGS), in the city of College Park, Maryland, USA was established in 1909. It is the world’s oldest airport in operation and was conceived when Wilbur Wright (were the Wright Brothers really the first to fly?) arrived at the field to train two military officers in the US Army.
I am sure the Wright brothers never imagined what huge revenue generators airports would one day become.
So let’s get back to the technology that will disrupt this multi-trillion-dollar industry — the Blockchain. But first, what is this blockchain we keep hearing about? Simply put, the blockchain is the new technology of trust.
Technically, blockchains are secure by design and are an example of a distributed computing system with high Byzantine fault tolerance that create a decentralized (something most governments, banks and economic girlie men hate) consensus. This makes blockchains potentially suitable for anything from the simple recording of events, medical records, any potential records management activities, such as identity management, transaction processing, documenting provenance, or even food traceability. Basically, the blockchain is used as a distributed ledger which is managed by a peer-to-peer (P2P) network that collectively adheres to a protocol for validating any new blocks of information. Once recorded, the data in any given block cannot be altered retroactively without the alteration of all subsequent information blocks, which needs a collusion of the network majority. Its democracy meets technology with a hedge on democracy’s most important risk factor — human (behavioral) error.
Our modern airports have evolved towards the wrong direction of the technology and socio-empathetic spectrum. If driverless cars already exist, and pilotless planes are on their way, shouldn’t we also expect automated airports?
Without getting into the technical details of the blockchain, let us recount an ideal departure scenario using a variety of existing technologies:
Ideal Departure Scenario
T-? No need for you to calculate the optimal time, your driverless car will calculate the optimal time for you to leave home before your flight take off time. For all you Apple fans, Google Now already does this.
Your driverless car is supported by blockchain technology that allows you to check in to the ledger of passengers confirmed for the flight. Forget those three annoying questions asked by the ground staff, your automated vehicle is fitted with a retinal scanner (cost is so cheap!) that can also pre-scan your travel documents during the drive. But wait, there’s more. Even before your commute to the airport, the car will weigh your luggage in its trunk (patent pending), which will only close if your checked/carry-on baggage is in line with airline guidelines (or even better, if it conforms to the Byzantine fault tolerance set forth by the decentralized ledger). Bags too heavy? No problem, just swipe your credit card or use any number of online payment solutions to pay those excess baggage fees (another huge money maker for airlines).
T-0:30- Bottleneck 1 (BN1) — Passenger Curb Side Drop Off
Forget this bottleneck, since we’re day dreaming (especially easy while cars drive themselves), why not have our drone car simply drop us off to the plane itself (1940’s style). But wait you ask, what about the terrorists? Again, no problem. Let us simply combine BN5 to 9 from the first example into a Smart Sky Bridge solution (patent pending), which doubles up as a metal detector/geolocator beacon and body/ticket scanner. This means that while you wait to get on your flight and instead of looking at those crude ads sponsored by banks, the airport is actually earning its tax fee. This actually may not be too far off given Dubai’s recent annoucement of a ‘Smart Tunnel’ to streamline the immigration process.
By the way, these same blockchain airport cars could be easily tweaked to pick up the pilot, first officer and the crew and could even be fitted with in-car breathalyzers (patent pending) to ensure non-pliant pilots compliant with air safety regulation.
And since all planes will eventually take off vertically, we can also save on all that meaningless runway space — which globally I calculate to be around 170,000 sq km. That’s larger than Tunisia or ten times the size of Kuwait. Virtual Take Off and Landing (VOTL) has been used in the military since the last millennium, so whether it’s through the tiltrotors of the Bell Boeing V-22 Osprey, the directed jet thrusts seen in the Harrier family, the new F-35B Lightning II Joint strike Fighter (JSF) or the Bavarian beauty Lilium, expect VOTL to go from tactical to practical sooner than later.
Now, we have not yet even begun to calculate the cost savings of the time saved by busy business class passengers and its positive contribution to the Knowledge Economy. Just looking at the 25 million business passengers flying into Heathrow, one hour of time saved waiting in pointless lines at the airport means 25 million hours that could be instead used productively, which equals to roughly $2.5 billion saved (if we assume the opportunity cost of the average business travelers hour to be a mere $100). Again, applying those unit economics to a simple bell distribution across all the business travelers crisscrossing around the world’s 43,983 airports, will easily net us global cost savings in the trillions.
Furthermore, we have only so far focused on the departure side. The arrivals process could also be further streamlined. Innovations like Dubai’s “Smart Tunnel” are just the start. I mean why in the age of last mile delivery startups that compete to deliver everything from sperm count measuring kits to szechuan sesame chicken, do I have to wait for my bags to lazily float down those antiquated carousels. I mean my bags have already been through two or three different metal detectors at some other ancient airport. Those same driverless cars could simply pick them up straight from the plane so that they are waiting for you at home (Jet Blue does this already).
But what about the world’s 43,983 airports? What should the world’s governments do with them? My suggestion is something that most government could find very en vogue now…entrepreneurial incubators.