RIGA, Latvia — Doing business in virtual currencies is nothing new to airlines. But even the complex market of frequent-flier miles is an order of magnitude simpler than rebuilding such core operations as ticketing on cryptocurrency technologies like non-fungible tokens (NFTs).
In an onstage interview at the TechChill 2022 conference here, the chief executive of an avowedly crypto-curious airline unintentionally emphasized that difficulty more than once.
“The future is definitely Web 3.0,” said Martin Gauss, CEO and president of airBaltic.
Back in 2014, the Riga-based carrier started accepting customer payments in Bitcoin. Last spring, it began selling small sets of NFTs highlighting cities in Latvia, whose government owns 97% of the firm. And in March, airBaltic announced that it would follow up that “City Collection” series by minting 10,000 “Planies” NFTs that would include benefits for its frequent-flier program members “including loyalty points, vouchers and other surprising privileges.”
Gauss pitched these experiments as ways to increase customer engagement. “We cannot do it unless we show a business case that there is more money coming out than invested in it,” said moderator Krišs Pujāts, CTO of Gravity Team.
But the airline’s own customer research has shown minimal awareness of the NFT concept, Gauss said later. Among 14,000 people who responded to a survey of its 600,000-odd frequent-flier program, only 1% of Latvian speakers said they knew what an NFT was, while 6% of English speakers answered affirmatively.
After the Planies announcement, travel journalist and airline consultant Seth Miller inspected sales of the earlier NFT collections on the OpenSea marketplace and estimated that airBaltic had sold less than half of the 190 minted, with a total portfolio value of just over $ 11,000.
Gauss also suggested, without much elaboration, that airBaltic would move its loyalty program to a cryptocurrency foundation: “We want to be leading in the way of tokenizing the frequent-flier program,” he said.
And, he added, plane tickets themselves could benefit from a similar upgrade, saying “maybe airline tickets can be NFTs.”
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This, too, left questions unanswered. Gauss predicted that a tokenized ticket would have a smaller carbon footprint than the one issued today. But he did not explain how the computational work needed to write transactions into a blockchain ledger would use less power than processing a credit-card transaction, saving the purchase in a database, and emailing a boarding-pass PDF.
He suggested that this would yield a system with greater data integrity, “where you can prove that this is the owner of the ticket, this is how it’s changed.” But airlines must collect detailed passenger information for every purchase; anonymized market that might benefit from the crypto world self-sovereign identity possibilities.
Even airBaltic’s welcome of cryptocurrency payments has its limits, Gauss noted. “We don’t hold Bitcoin,” he said. “The only way for us to do it today is to exchange it immediately into euros.”
(Disclosure: I moderated a panel at TechChill, with the organizers covering my airfare and hotel.)
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