Smart travel: Can blockchain keep customers happy?

Smart travel: Can blockchain keep customers happy?


The start of a new year is always a busy time for booking holidays. As the excitement of the Christmas season draws to a close, consumers quickly turn their attention towards the next big event they can add to their calendars. With an influx of promotions from travel operators splashed across social networks and email marketing campaigns, it’s clear that airlines and tour operators are hoping to cash in on the January sales by tempting consumers to travel abroad.

Yet, even when they’re planned far in advance, unexpected occurrences can happen on the day consumers are booked to depart. In fact, in 2016 there were almost 450,000 flights delayed coming in and out of the UK alone32. Flight delays and cancellations can quickly bring holidays to a grinding halt before travellers have even left the airport. The knock-on effects are costly, causing some passengers to miss their connecting flights to other destinations, having to pay late check-in fees for hotels, or even arriving to find that they’ve lost their room reservation altogether. This could significantly impact net promoter scores (NPS) and raise the level of complaints. So what can be done?

smart travel

Transform the customer experience

More than ever, consumers are choosing to spend their disposable income on experiences rather than physical products, leaving airline companies and other tour operators a chance to gain a lucrative chunk of the consumer’s wallet. However, when a flight is cancelled, customers who are forced to undergo lengthy and complicated claims procedures and shown a lack of empathy throughout the process, may switch to competing airlines for future bookings. As a result, the airline company misses out on repeated revenue and also sacrifices their market share and positive online reviews.

What’s more, almost a quarter of holidaymakers don’t purchase travel insurance. The same hassle of making a claim often deters their buying decision. This means there’s a sizeable portion of the travel market – 25% – that no insurer is making money from at all.

To meet consumers’ expectations when things go wrong, and ensure future profitably for the airline, tour operator and insurer, there needs to be greater synergy, a smoother claims process, and transparency across the board. Emerging technologies such as blockchain could be revolutionary and rise to the challenge.


Leveraging new technologies

Blockchain can facilitate rapid and automatic reimbursement to consumers in the event of flight delays and cancellations. When consumers purchase travel insurance, a record of this transaction, a ‘block’, is saved on a network – a ‘ledger’. The insurance policy is also added to the ledger. It states the terms everyone has agreed with, for example, that the consumer is entitled to compensation if a flight is delayed by more than three hours. In the context of blockchain, this agreement is known as a ‘smart contract’.

As soon as the flight delay occurs, the pre-agreed smart contract can be auto-executed by the airline and the insurance company so the consumer receives their compensation without the need to manually apply for a claim. Blockchain technology, therefore holds the power to reduce prolonged disputes between travellers and insurers to something of the past. But how?


Sharing a single source of truth

Blockchain technology can enable all parties to access a shared, single source of truth. The records on the ledger – the transaction and the smart contract – are encrypted. This means they cannot be altered, tampered with, or deleted. They are also timestamped and ‘distributed’.

In a private enterprise blockchain, this means the record is distributed to only the relevant involved parties to see: the consumer, the insurer, the airline company, tour operator and global air traffic databases. More transparency between ecosystem participants should mean less disagreements, and eliminates the need for the customer to go to great lengths to prove that they’re right when making a claim.


Enhanced operational efficiency

But blockchain’s benefits don’t end with the customer – it can also be good for business. It has the potential to leave travel companies with fuller pockets and more cash to invest elsewhere. The digital verification of claims renders intermediation redundant. This is because claims no longer have to be handled manually by a middleman sifting through endless amounts of paper. This adds value because insurers can reduce the amount of manual labour required, and ensure that the workforce is being used appropriately and productively.

Reports can also be run directly from the ledger for compliance and regulatory purposes. The introduction of a real-time, immutable audit trail could facilitate proper disclosures and compliance checks, reducing regulatory burdens, and administrative overheads even further.



The article “Smart travel: Can blockchain keep customers happy?” by Wei Keat Ng, KPMG Global, was taken from the publication entitled Leisure Perspectives.




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