Corda in the

Aviation Industry
Leyla Osipova Tiago Oliveira
Victor Mortreu Nora Naffa
Ivo Rosero Lalama Gonzalo Martinez Romero
“Blockchain is the next frontier
that’s going to completely
change worldwide
supply chains.”

Fred Smith FedEx CEO

Contents

1. Executive summary 5
2. Blockchain in Aviation 7
3. Use Cases 10
1. Loyalty Programs 10
2. Maintenance Repair and Overhaul 12

4. Supply Chain Business Problem 15

5. Canadian Air Cargo Landscape 20

6. Targeting Strategy 27

7. Risk Assessment 31

8. Future Steps and Conclusion 35

9. References

10. Appendix
 1.
Executive
Summary
1. Executive Summary
In the context of cross-industry expansion, R3 is cooperating with the Ivey Business
School team to expand its ecosystem by finding business use cases for its services and
blockchain technology, and then construct a targeting approach for partners to join and
develop in their open-source blockchain platform ‒ Corda. After extensive multi-industry
research, the aviation industry was chosen as the subject of cross-industry expansion.

Based on the findings, the team recommends R3 to target the aviation industry, which
offers a high potential of blockchain adoption across multiple stakeholders and several
specific use cases. The need for data sharing, the potential for scalability, and the early
mover advantages are key benefits of engaging such industry. Further research led the
team to identify five uses as most promising.

· Supply Chain/Cargo
· Loyalty Programs
· MRO Systems
· Flight Data
· Crew Management

With supply chain cargo being the main lead presented to the client, the team proceeded
to run diagnostics on the Canadian market, mapping key stakeholders and process flows
within the air cargo community.

Results include a partner engaging approach/framework that R3 can use to grow an air
cargo ecosystem, potentially applying in other use-cases. A consortium building approach
is recommended, using the framework developed by the team. Such a framework
includes main considerations for Corda when identifying blockchain use cases and a
subsequent engaging strategy that can be used for potential partners. The following
paper further describes the main findings of the team and the reasoning for the
recommendations.

5
 2.
Blockchain
in Aviation
 2. Blockchain in Aviation
Blockchain is considered as one of the technologies that may
have a major impact on the future of aviation. Airlines, airports
and other stakeholders are currently developing a wide variety
of applications.

There is significant traction and interest in blockchain within the aviation

industry. Multiple use-cases are gaining popularity and being tested
worldwide. Major stakeholders begin to realize how their processesʼ
characteristics could be enhanced with a Distributed Ledger Technology.
There is high room for improvement in modernizing data-sharing among
siloed databases and building an enhanced, seamless and safe travel
experience. According to a study by Accenture, aviation ranks third for the
projected blockchain adoption, out of 18 industries polled (Meijer, 2018).

59% Uses in passenger identification, tokenization of frequent flyer programs, e-

tickets, item custody-change tracking, and maintenance efficiency are
of airlines
actively perceived as beneficial by the majority of airlines (SITA, 2018). SITA, the
explored
Blockchain world's leading air transport IT specialist, claims that 10% of airlines have a
in 2018 focused program for blockchain initiatives and 59% had an active pilot or
research programs in 2018 (compared to only 42% in 2017). Airports, key
players in the industry, are also exploring such technology. More than 30%
of them are planning R&D blockchain projects by 2021 (SITA, 2018). The
most commonly expected use of blockchain is in passenger identification,
with 40% of airlines believing it would be of major benefit.

Some of the most known initiatives in the industry include Loyyal (customer
reward management), SITAʼs FlightChain (real-time flight data storage),
Winding Tree (travel platform). Consortia such as MOBI or ICAO push for
further collaboration and research for digitization of the industry.

2. Blockchain in Aviation 7
 The International Air Transport Association (IATA), the trade association for
airlines security and efficiency standardization, is ongoingly researching the
implementation of standards related to blockchain technology.

35% Another promising use-case is Air Cargo, which is the focus of our research.

of global trade The sector represents 35% of global trade by value, and the global freighter

by value is fleet is expected to double in the next 20 years (Boeing, 2017). “Countries

transported by with 1% better air cargo connectivity engage in 6% more trade.” (IATA,

Air Cargo. 2016). Building and engaging a consortium with the Air Freight community
to lead this increasing trade engagement is a key opportunity for Corda, as it
can later expand to other uses in the broader aviation community.

2. Blockchain in Aviation 8
 3.
Use Cases in
the Aviation
Industry
 3. Use Cases in the Aviation
Industry
A wide range of business problems would benefit from a
Blockchain solution in the aviation industry, from loyalty
programs to maintenance of aircrafts and worldwide supply
chains.

One of the main advantages of targeting the aviation industry is the large
number of business problems that could potentially benefit from a
Blockchain solution. Safety and regulatory concerns have resulted in
massive, inefficient and heterogeneous processes which can be individually
or jointly tackled with a Distributed Ledger. The diversity of stakeholders
and uses for this technology in the industry represents a key opportunity for
R3 to target an ecosystem with considerable scaling potential. Loyalty
programs, Maintenance, Repair and Overhaul (MRO) and Supply chain use
cases are discussed below. Other potential cases regarding passenger
identification and crew records are referred to in Appendix 1.

1. Loyalty Programs
1. Disintermediation

Current programs for most airlines do not exploit their full potential as
customer retainers or data gatherers, and expose the providers with high
management and intermediation costs. The top 3 valuated loyalty programs
(SkyMiles, Aadvantage, Mileage Plus) add up to USD 40 billion, yet less
than 30% of US travelers think loyalty programs are worth their reward
(Statista, 2019). The need of customers for one-stop services has led many
incumbents in the journey component (airlines, hotels, car rentals) to
depend on online travel agencies as intermediaries. A holistic ecosystem in
which partners can cooperate and interchange loyalty points would reduce
the need for such intermediation. Additionally, most loyalty programs must
go through the banking system (due to tracking, reporting and transparency
requirements), which results in increased costs of running the programs.

3. Use Cases in the Aviation Industry 10

 With a single source of truth for all stakeholders, the disintermediation of
such services becomes a potential solution.

2. Real-time transaction updates

The tokenization of points and the creation of an ecosystem where customers

have increased options for redemption would allow transactions to be
recorded and updated in real-time. This would eliminate the gaps that loyalty
providers currently have in their balance sheets as points must be deferred
until redemption (leaving them with high balance sheet liability).

3. Data Gathering

Managers of such ecosystems will be able to properly launch customization

targeting strategies through the data provided by the customersʼ redemption
behavior. Blockchain and more specifically Corda Enterprise would provide
the controlled security and transparency that ecosystem providers require to
share their data with trusted partners. This will motivate customers to use
their loyalty programs more often. An interesting success case is Singapore
Airlinesʼ Krispay (SingaporeAir, 2018). This digital wallet allows members to
convert their flyer miles to a digital currency that can be used in various
partners of the ecosystem (gas stations, restaurants, hotels) (Teng, 2018).

Figure 1: Key Stakeholders in Loyalty Sector

3. Use Cases in the Aviation Industry 11

 2. Maintenance, Repair and Overhaul
The Maintenance Repair and Overhaul process faces several issues that
could be resolved with a Distributed Ledger Technology. MRO and the
aftermarket sales of parts were USD 82 billion in 2018 worldwide and
represented 32% of the Canadian total expenditure in the aerospace industry
in 2017 (Sullivan & Frost, 2018). Air France KLM Engineering and
Maintenance is using its MRO Lab to experiment with the future possibilities
of blockchain. KLM has found it so successful that it has opened a second
lab ̶ MRO Lab Singapore ̶ in collaboration with Ramco Systems (Bellamy,
2017). A Blockchain could solve the following business problems:

1. Certification Issues

32%
In their 20 to 30 years of lifetime aircrafts change of hands multiple times.
Because local regulators define maintenance records and standards, they
Of the might differ in content and format (i.e. Some aircraft logbooks are still on
Canadian paper format). A blockchain solution in the transaction of aircraft or
A&D spend
standalone parts would automatically have access to the certification of each
element, its repair records, and additional flight data. The availability of
information will improve the data exchange process, but more importantly,
having a common ground for maintenance data can considerably improve
predictive maintenance and decrease related costs.

2. Supply Chain Visibility

Operators know little about the exact value and availability of certified parts
that are out there in the market and ready for use (Jet Data, 2019). The loss
related to the risk of missing one part in the maintenance process is so high
that airlines spend heavily in spare parts inventory, locking huge amounts of
capital in parts that are continually depreciating. A blockchain platform can
allow operators to see the spare parts availability by type and region in the
entire supply chain. The expected effect of increased visibility is to lower
inventory costs and reduce overproduction.

3. Use Cases in the Aviation Industry 12

 The stakeholders of this ecosystem include Original Equipment
Manufacturers, parts manufacturers, MRO companies, airlines, parts brokers
and regulators.

Figure 2: Key Stakeholders in MRO Sector

3. Use Cases in the Aviation Industry 13

 4.
Supply
Chain
Business
Problem
 4. Supply Chain Business
Problem
Several stakeholders within the Commercial Aviation and
Logistics ecosystem could increase their efficiency and lower
their costs with a Distributed Ledger Technology.

A promising potential for Corda and the one used for exemplifying the
engaging framework was identified in the Commercial Aviation and Logistics
ecosystem. Various stakeholders in the air cargo supply chain still operate in
a fragmented, inefficient and paper-based data exchange environment (See
Appendix 2).

Creating a Cargo Community Platform on Cordaʼs private permissioned

blockchain could be a potential solution, by enabling different parties to
access real-time cargo statuses, ease paperwork processing, and workflow
and have improved visibility and accountability across multiple
organizations. Furthermore, a Corda-based data sharing platform could be
the springboard for further development of collaborative applications in the

10-15 air cargo ecosystem.

players are
involved on A logistical aviation supply typically consists of 10 to 15 players, which might
average in a be efficient within their own business processes, but are not synchronized
supply chain
as a whole. This means that door-to-door delivery in a fragmented Air Cargo
supply chain can take up to seven days, whereas classic integrators (e.g.
DHL) can do this is two days. A clear need to integrate and align the
logistical, operational and data processes between different players in the
supply chain was found in the Arrival/Import processes.

1. Key actors in the Cargo Community Platform

1. Freight Forwarders (FF)
Handle the door-to-door (D2D) shipment activities for the shipper/receiver:
manage booking for the freight and organize delivery from/to the airport.

4. Supply Chain Business Problem 15

 2. Ground Handling Agents (GHA)

Service providers at the airport that receive, store, handle and ship freight
under contract to one/many airlines: They cover both landside and airside
operations.

3. Carriers

Cargo Airlines that offer air freight capacity. They provide airport-to-airport
(A2A) transport and have contracts with ground handlers for airport
operations.

4. Airports

Owner and operator of airport infrastructure, including the cargo terminals.

They perform the Air Traffic Control, manage ground crew, safety,
navigational aids etc. Their goal is to attract as much high-value
import/export and transit cargo and charge a fee for the use of their
infrastructure.

5. Customs

Border controls on the movement of people and goods.

6. Others

In some cases, it might be interesting to include the Shipper/Receiver,

Business Network Operator (software provider), or industry federations
(IATA) in the ecosystem as well.

Figure 3: Simplified Traditional Import/Arrival Process

4. Supply Chain Business Problem 16

 As visualized in Figure 3, when the cargo plane arrives, the GHA gets
notified, unloads and has to create a (paper-based) delivery receipt
document for every imported freight. After that, it has to initiate the customs
clearance process, and wait for the approval document. Once the goods are
customs cleared, only the designated FF should pick it up from the GHA, but
this is not always the case. Currently, the GHA sends out a ʻpick-up right to
the FF and moves the freight to the landside warehouse. This paper-based
and fragmented process is very time-consuming due to physical transfer of
documents. Moreover, it lacks transparency on which FF will pick up a
shipment, resulting in costly mistakes. Additionally, it involves a significant
risk of unlawful claims of goods and delivery to the wrong forwarder.

Figure 4: Simplified Future Import/Arrival Process

A Solution is proposed in Figure 4: A Cargo Community Platform can

automate the execution of Air Way Bills (Cargo Contracts) all over the value
chain, but can particularly enhance the import and delivery receipt process:
Customs and GHA receive updates upon freight arrival, allowing them to run
their processes in parallel.

4. Supply Chain Business Problem 17

 Immediately after the Customs approval, the FF is notified and asked to
choose a Shipment pick-up slot, which simultaneously will entitle him to a
Digital Release Right (DRR). The GHA can create and assign the DRR
leveraging on the DLT, by uploading the traditional pouch of documents on
a blockchain, as is illustrated in Figure 5. Upon arrival of the truck, the DRR
is used to verify ownership and fulfil other contractual agreements of the
AWB.

Figure 5: Pouch of Documents Yesterday vs. Tomorrow

The advantages of the digitized and blockchain-based process are:

• Increase efficiency of the landside pickup process

• Increase transparency
• Allow proactive shipment preparation
• Enable flawless and secure shipment pick-up
• Eliminate paper document handling

4. Supply Chain Business Problem 18

 5.
Canadian
Air Freight
Market
 5. Canadian Air Freight Market
The Canadian Air Freight Market is concentrated in the hands of
a few players, especially when it comes to international routes.
Airports, Industry Associations and Software Providers are
some of the key players of the ecosystem to engage with.

As stated in the framework, a crucial step is to define a geographic focus

and identify a specific community. For this case, we focused on the
Canadian market. In 2017, the total Canadian air cargo industry grew by
9.4%, reaching $1,405 million in value (MarketLine, 2018). As visible in
Figure 6, two main airports are sustaining this growth, both domestically and
internationally. First, the Toronto Pearson International Airport accounts for

9.4% 37% of total air trade volume in Canada and channels products to the US
and Europe (Statistics Canada, 2018), while Vancouver is the second largest
Growth rate in
2017 airport and is an open door to the booming economy of Asia/Pacific.

Figure 6: Distribution of the Air Cargo Volume per Region

5. Canadian Air Freight Market 20

 There exist two main types of supply chains in the Canadian air freight,
depending on the stakeholders that take part in the process. The first one is
the Manufacturer-to-Consumer model, where a single company is responsible
for the entire good's movement. The two leading supply chain integrators in
Canada are FedEx and Purolator (Integrator Approach). The second one
(more commonly used) is the Market-to-Market model, where different
specialized companies are sequentially responsible for the good's movement
(Freight Forwarder Approach). The main stakeholders of this model, on which
we will focus, are analyzed below. However, the same blockchain solutions
could be partially applied to integrators. FedEx express already joined
Hyperledger Fabric to develop its own blockchain platform and applications,
with the goal of simplifying operations (Hyperledger, 2018).

Figure 7: Air Freight Supply Chain in Canada

Engaging main players in the conversation is likely to increase interest

of other stakeholders. Through secondary research and expert
interviews, the following order of stakeholders within the Canadian
market was determined in terms of influence on technology adaptation:

1. Main Airports
2. Software Providers and Industry Associations (e.g IATA)
3. Large Air Carriers

5. Canadian Air Freight Market 21

 4. Ground Handling Agents
5. Freight Forwarders (FF)

Main airports represent hubs for large share of data transaction to happen
(e.g. change of ownership; airway bills shift from air carriers to ground
handlers, customs, FFs, etc.). These stakeholders possess strong influence on
the standards adopted. Similarly, software providers and industry associations
may suggest adoption of certain transaction standards based on blockchain.
IATA has introduced essential initiatives now enforced across Canadian air-
space (e.g. e-airway bill) and also organizes blockchain discussions. Air
carriers are next on the list, with bigger ones having especially strong
influence (i.e. Air Canada and Westjet). Ground handling agents and FFs are
lower down the list, given individual companies have limited power. The
following section describes main stakeholders of the ecosystem more in-
depth.

1. Airports
Playing a vital role in air cargo development as a hub were all stakeholders
interact, airports enable activities of other players of the supply-chain. There
are two main types of airports in the Canadian air cargo landscape (GWL,
2014). Origin-destination airports such as Toronto and Vancouver, serving as
international and intercontinental getaways airports, possess substantial trade
both because of production and consumption of products. Hub/Distribution
airports serve as transit locations (i.e. Hamilton in the Toronto Area). The first
type of airports have higher capabilities both for expansion of their air cargo
capacity and distribution technology developments. Appendix 3 presents a list
of Canadian Airports ranked by volume of exported and imported goods.

Airports have proven to be good initiators for blockchain innovation projects.

As an example, Brussels Airport founded a multi-stakeholder cargo
consortium to build its award-winning data-sharing platform leveraging
Blockchain (BRUCloud, 2018).

5. Canadian Air Freight Market 22

 2. Software providers and Industry Associations
A second interesting stakeholder to bring into the ecosystem would be IT
providers (e.g. SITA and CHAMP) and Industry Associations (IATA, FIATA,
and CIFFA), who often develop industry standards. Although they donʼt
explicitly interact in business processes, they can apply pressure into adopting
a certain standard or technology, which makes them unique in our analysis
(with potential to influence all other stakeholders). For example, IATA started
a discussion and publishes regularly on Blockchain technology in aviation.
Benefits of having their support includes massive gain in credibility and an
opportunity to align direction of the consortium according to views of
regulators. In the IT provider segment, SITA takes the lead with its Aviation
Blockchain Sandbox, a major research project on the Blockchain's potential.

3. Airlines
In the flight operators side, Canadian air freight is dominated by two major
airlines, which combined gather 80% of the domestic market share; 46% by
Air Canada and 34% by WestJet (Statista, 2018). Although not focusing on
supply-chain, Air Canada has recently shown interest in Blockchain
technologies. In their quest to be a “global leader in innovative airline
distribution solutions”, the company is exploring new ways for sales
distribution in partnership with Winding Tree (Air Canada, 2018). Its main
competitor, WestJet, is also exploring possibilities enabled by blockchain in
the Loyalty side (Gibillini, 2018). Other Canadian freight carriers (e.g. CargoJet
and Air Transat) either mainly focus on domestic transportation, or have little
stake in the market. Smaller national carriers serving the North of the country
are not considered for our specific business case.

The key players to focus in terms of market share, Blockchain initiatives and
international routes are:

5. Canadian Air Freight Market 23

 Figure 8: Airlinesʼ Propensity to Join the Environment

4. Ground Handling Agents

The Canadian GHA industry is composed of one major player ‒ Swissport ‒
and several smaller ones, mostly family-owned. These companies operate in a
very mechanical industry with little focus on R&D; consequently, it deems
unlikely that these small-to-medium ground handlers would become first
adopters to jump-start the ecosystem. However, this is not the case for bigger
companies. For instance, Swissport has signed letters of intent with two
different Blockchain providers- i.e. on inventory service with Winding Tree and
on tracking cargo documentation with Olistics. (Swissport, 2018).
The key players to focus in terms of size, existing efforts in R&D and
propensity to join a blockchain environment are:

Figure 9: GHAʼs Propensity to Join the Environment

5. Canadian Air Freight Market 24

 5. Freight Forwarders
According to the CIFFA ‒ Canadian International Freight Forwarders
Association ‒ over 100 FF companies operate within Canada. Given the
extensive fragmentation of the market, focus was given to larger companies,
which tend to demonstrate more interest in blockchain. Logistics giants such
as Kuehne & Nagel, Panalpina, and C.H. Robinson have joined the Blockchain
in Transport Alliance, the largest commercial blockchain alliance in the world
(BiTA, 2019). Geodis, another big player, partnered with Project Verte to ease
the use of cargo transportation by SMEs (Geodis, 2019).

Main players to focus on, given their size, distribution capabilities in Canadian
Airports, existing efforts in R&D and demonstrated interest in blockchain
technologies, are:

Figure 10: FF Propensity to Join the Environment

5. Canadian Air Freight Market 25

 6.
Targeting
Strategy
 6. Targeting Strategy
To promote the adoption of blockchain technology and build an
ecosystem within aviation, it is recommended for R3 to follow a
consortium building strategy.

Consortiums provide lower-risk opportunities for parties to experiment. In industries with

low social trust, due to pre-approved membership agreement (before developing), there is
less uncertainty (IATA, 2019). A consortium also enhances technical trust, as there is
increased participation of stakeholders in the co-creation process. In the case of the
aviation industry specifically, there exists a reluctance to change, given the industryʼs
sensitivity to safety and operations. For this reason, a consortium approach is ideal for R3
to offer lower-risk opportunities and attract partners.

Another key benefit of a consortium is that it provides an even-level playing field. Other
ʻone-playerʼ approaches highlight key players above others, resulting in distrust to share
strategic data ‒ e.g. Maersk & IBM (Allison, Ian 2018). The aviation industry is
characterized by strong single players or alliances (e.g. in production: Boeing, Airbus,
Bombardier etc..), and reaching to single strong players might cause others to react and
build competing consortiums. For instance, Air Canadaʼs dominance may discourage
smaller competitors to join. The consortium fixes this by integrating players from start,
reducing sense of a "winner-takes-all" scenario.

Finally, it is important to consider that after financial consortiums, cross-industry

consortiums are the most popular ones (Shatsky David, 2017). Through a consortium-
building approach, R3 can leverage its strongly established ecosystem from financial
origins by parallelly capturing interests of other stakeholders willing to interact with a key
sector. Transactions in the aviation industry encompass a highly diversified portfolio of
stakeholders (travel agencies, MRO, payment facilitators, customs, regulators, etc.). This
presents a potential to scale to an ecosystem that truly embodies cross-industry
interactions.

6. Targeting Strategy 27
 Consortium Building
The team stresses importance of strong leadership and
initiative to be taken by R3. Taking on a host role to encourage
conversations around use-cases and reach a consensus on the
proof of validity requires constant interaction (online and
offline) with potential partners. The cross-industry analysis
resulted in identification of the following key issues that
companies consider when evaluating a platform to join:

1. Legacy

Leveraging strengths like external funding, existing agreements

with relevant industry players, and offering terms that secure
an ongoing relationship are best practices that R3 can
communicate to convince partners. Relying on funds beyond
membership fees is an advantage for R3 over other BaaS
(blockchain as a service providers), as it shows the market
confidence in the firm. Similarly, having already engaged with
key players in the financial sector and able to offer multi-year
contracts that guarantee service provision are characteristics
that should be communicated when building the ecosystem.

Interoperability
2.
Potential partners may be reluctant to join ecosystems that will
trap them with a single vendor offering. Given the early stage of
blockchain, communicating the interoperability between Corda
and other platforms (i.e. Ethereum) and with existing systems
will reduce sense of risk for partners to join.

6. Targeting Strategy 28
3. Permissioned-based sharing

In many commercial cases, partners are mainly concerned with

limited sharing they want to engage in. A permissioned
blockchain such as Corda Enterprise offers an operational
structure that ensures parties decide with whom to share data.
Furthermore, the transaction-based consensus that Corda
offers is advantageous for parties that want to share decisions
selectively. The multiplicity of stakeholders and data in the
aviation industry translates into increased security and privacy
needs that Corda Enterprise already offers.

To conclude, R3 scores high in all three key messages that

potential partners need to hear when engaging in
conversations for a possible consortium; consequently it is
recommended to favor this engaging strategy. The following
illustration outlines potential leads to contact within the
Canada Air Freight Community, in order of influence and
propensity to join.

Figure 11: Identified Leads in Canada

6. Targeting Strategy 29
 7.
Risk
Assesment
 7. Risk Assessment
The red flag risk identified (highest probability and highest
impact) is the risk of competitors capturing a key part of the
ecosystem. Other considerable risks include lack of interest of
airlines to share their data and join the consortium.

1. Business Risks:
B1: Airlinesʼ lack of interest in joining the ecosystem and sharing data
Finding a
minimum viable
Given the strategic nature of their data, sharing is a sensitive topic.
ecosystem remains
one of the biggest Considering high influence on other stakeholders, their stance on the
challenges when
consortium initiative would heavily impact R3ʼs initiative.
building a
blockchain
B2: Airportsʼ lack of interest in joining the ecosystem and sharing data
consortium.
Airports need to be incentivized to share their data. Currently, pro-active
data-sharing occurs only in a few cases. Being hubs where all stakeholders
meet, airports' stance will be impactful.

B3: Freight forwardersʼ lack of interest in joining the ecosystem and sharing
data

These stakeholders are currently very active in researching initiatives for

streamlining data and logistics, showing an unlikeliness to be reluctant on
joining an innovation consortium. However, several key players have market
influence so their stance would be impactful.

B4: Ground handling agents' lack of interest in joining the ecosystem

Ground handling agents have the least market influence within the aviation
ecosystem, which means this risk is not that impactful.

B5: Perception of Corda in aviation, limiting partner engagement (Financial

Industry focus)

7. Risk Assessment 31
 This is a critical risk and is currently a significant obstacle for R3 to
overcome overall. Perceived largely as a finance-focused platform can
discourage players from other industries to join (they might assume limited
network and technical expertise cross-industry).

2. Market risks:
M1: Low tech maturity of stakeholders

Recency of blockchain technology and low digital adoption of several

stakeholders represents a likely risk. However, as a technology facilitator, R3
could potentially benefit from this.

M2: Offsetting impact of structural growth drivers may be smaller than

anticipated

There exists a high level of consensus on the potential gains from adopting
blockchain technology in the supply-chain ecosystem. If growth drivers are
smaller than anticipated, the impact on the consortium might not be that
high, given that players could potentially explore other uses.

M3: Competitors gaining a jump-start on aviation and capturing a critical

mass

This is another crucial risk for R3. There are currently several leading
platforms trying to engage with multiple cross-industry ecosystems. Given
the winner-takes-all dynamics of platforms, this is considered as high-
impact risk.

3. Regulatory and legal risk:

R1: Enforcements from regulators / standard providers not aligned with

blockchain technology

This risk is considered of high impact, but given that standardized such as
IATA and other airport authorities is increasing their exploration efforts on
blockchain, it is unlikely regulations towards technology turn unfavorable.

7. Risk Assessment 32
 4. Risk Mitigation:
The analysis identifies two main risks. Firstly, the risk of Corda being
perceived as a finance-focused platform might deter some stakeholders
from considering it as their preferred platform. It is recommended for Corda
to get involved in alliances that include players from various industries and
develop a strong communication plan to capture this cross-industry image.
Secondly, the risk of competitors moving first and capturing a key sector of
the market. To mitigate this, it is vital for R3 to begin hosting conversations
within Aviation Community as early as possible, and be attentive to any
POCʼs that could be developed in other platforms (which would validate the
problem and allow them to leapfrog to the next stage).

Figure 12: Risk Assessment

7. Risk Assessment 33
 8.
Future Steps
and
Conclusion
 8. Future Steps & Conclusion
1. Future Steps
The aviation sector is a must-capture for blockchain service providers. R3 should engage
partners at a fast pace in order to reap the potential benefits of such ecosystem. First, an
ʻearly adopterʼ in the ecosystem should be mandated as a chair and help to build the
consortium. Once all stakeholders are represented, an agreement on all facets of the
POC should be made. Third, a POC should be built and iteratively tested, until a final
product is found. Next, the consortium can focus on other business use-cases, building
on the existing infrastructure. If the business case generates sufficient value, its example
can be used to explore and convince consortia in other geographies, adjusting the
product with individual technicalities. Finally, R3 should leverage its presence in the cargo
ecosystem to moonlight into other sub-industries in the long-run.

2. Conclusion
To conclude, aviation is a highly promising ecosystem that R3 is advised to enter, with Air
Cargo being a potential beachhead. A consortium approach is recommended; first
conducting POC, and consequently fully expanding an array of use-cases within the
consortium. Additionally, it is advisable to keep a proactive attitude, given that the
majority of the blockchain industry experts perceive Corda as a financial industry
platform, rather than a cross-industry focused one. This eliminates various potential
applications and collaborations.

From the team's side, we are very appreciative of the support and time provided to us
from the R3 Team, having gained several insights into the blockchain industry and
operations. From the client's side, we hope there are some valuable takeaways, in terms
of perceived as a finance-only platform to the various potential points of contact.

8. Future Steps & Conclusion 35

 9.
References
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aerochain.org

3) AIAC . „State of Canada's Aerospace Industry - 2018 Report.” 2018.

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https://aircanada.mediaroom.com/2018-10-24-Air-Canada-Partners-with-
Winding-Tree-on-a-Blockchain-based-Travel-Distribution-Platform

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Air Cargo Belgium.

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Evaluating MRO Potential for Blockchain:
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potential-blockchain/

7) BiTA. (2019. 03 18). Member Companies. Source: Blockchain in Transport Alliance:

https://www.bita.studio/members

8) Brussels Airport Launches Blockchain Application on Their Winning BRUcloud Data

Sharing Platform.” BRUcloud, BRUCloud, 26 June 2018,
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application-on-their-winning- brucloud-data-sharing-platform.

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10) Casteels, H. (2018). Blockchain for Airlines Playbook + DRAFT V 0.1. IBM.

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https://www.flightdeckfriend.com/become-an-airline-pilot/pay-to-fly/

9. References 37
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Partnership in the US with Project Verte to Empower Small-and-Medium-
Sized Brands with E-commerce and Fulfillment Capabilities. Source: Geodis:
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program-ampli-1.1092288

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%20Report%20March%2012%202014%20FINAL.pdf

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Blockchain Consortiumʼs Latest Expansion. Source: Hyperledger:
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joins-hyperledger-in-blockchain-consortiums-latest-expansion

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9. References 38
 22) MarketLine. (2018). MarketLine Industry Profile - Air Freight in Canada. London,
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9. References 39
 10.
Appendix
 Appendix I: Other Use Cases in
the Aviation Industry
Crew Management
1. Misinformation

There is no centralized information system for pilots and other crew members
concerning their flight records. Surprisingly, the majority of flight accidents are
due to human error. According to Aeron, a Blockchain initiative for pilots, the
latest may forge flight log records and be less experienced than what they
claim. In addition to that, the incentives for the different stakeholders are
divergent; aircraft operators want minimum flight hours reporting to reduce
the maintenance costs and flight schools might be corrupted with regards to
the number of hours of their pilots. Thus, an inviolable Distributed Ledger
Technology like Corda would be an ideal solution for this specific case. The
parties involved are Pilots, Aviation Authorities, Air traffic Controllers, Aircraft
Operators, and Pilot schools.

10. Appendix 41
 2. Centralizing Data

The centralized hub of information would make it easier for all parties to
quickly consult the data and make informed decisions. This would not only
help with mitigating future human error by better holding parties accountable
for their actions, as it would also improve efficiency on other levels, for
example scheduling training for staff members.

Blockchain is the best solution, due to the distributed ledger component, as it

would easily guarantee that there is just one version of the truth. Corda also
has specifications that perfectly fit this use-case as crew records are very
sensitive information, making the firewall protection that the Corda platform
offers potentially very valuable.

10. Appendix 42
 Flight Data Management
1. Reduced Delays

The potential of blockchain in-flight data management relies on the

streamlining data sharing on flight status. Flight data sharing is highly
regulated, yet there is no single source of truth for such data and the are
frictions on the accessibility needs for several parties (Casteels, 2018). Siloed
information represents a coordination problem for airlines, airports and other
operators, which leads to delays that could otherwise be prevented. The cost
of delays in the United States alone was estimated to be 25 USD billion
(FAA, 2010), which suggest a potential cost-saving opportunity. Key
stakeholders include airports, flight operators, local regulators, IATA, ACI,
ICAO.

10. Appendix 43
 Security
1. Passenger data

An enhanced passenger data ʻsecurity & privacyʼ blockchain with a security

wrapper allows safe sharing of information such as passenger records and
flight manifests through authorized access requirements. Moreover,
passenger identity could also be automatically validated by designing systems
that allow digital verification of individuals on the blockchain, reducing
chances of committing fraud. Stakeholders of such blockchain system could
include governments, airports, and homeland security. A digital identity
solution has already been pursued by Canada (CBA, 2018). Furthermore,
uPort has developed an identity system on Ethereum (Shook, 2018) (uPort,
2019).

2. E-ticket issuing

Blockchain can tokenize and dematerialize e-tickets via smart contracts.

Airlines can have higher control of how a ticket is sold and use, by adding
more business logic and terms and conditions. This opens doors for tickets to
be sold by different partners in real time. With such a ticketing system, re-
scheduling, rebooking a flight and avoiding overbooking will get a lot easier.
This solution promotes resource efficiency and can allow a legal secondary
market in tickets (Casteels, 2018) (Meijer, 2017)

10. Appendix 44
 Appendix II: E-AWB Export
Process

(e-)AWB: (electronic)Air Way Bill = ECC(/P): Electronic Cargo Contract(/Print)

EAP(/W): e-Freight consignment with (no) accompanying documents
FF: Freight Forwarder
FOH: Freight On Hand
FSU: Freight Status Update
FWB: Electronic Master AWB
GHA: Ground Handling Agent
RFC: Ready For Carriage
SHC: Special Handling Code

10. Appendix 45
 Appendix III: Data Sources

Type Sources

Academic Journals Cointelegraph,

Ledgerinsights,

Secondary Sources Business Publications Deloitte, SAP, IBM

Regulations and standards IATA, AIAC

Whitepapers Corda platform, Aerochain,

Flightchain, IATA
Organization Person of Contact

R3 Kevin Rutter
Market Intelligence Lead
YXU Airport Gerry Vanderhoek
Manager, Commercial
Primary Sources Services and Passenger
Experience
MOBI Conference Alisa DiCaprio
Head of Trade and Supply-
Chain
S7 Airlines Viktor Nosov
Head of R&D Blockchain

10. Appendix 46
 Appendix IV: Number of
Consortia by Sector

Financial Services 26

Cross-sector 10

Life sciences & health care 3

Energy & resources 1

Technology, media & telecommunications 1

Public Sector 1

Consumer & industrial products 0

Source: Deloitte Analysis

10. Appendix 47
 Appendix V:

10. Appendix 48
 Appendix VI: General
Framework

10. Appendix 49
10. Appendix 50
 11.
Disclaimer
 11. Disclaimer

This report was developed by an Ivey team of MSc students from the Ivey
Business School in partnership with R3. It is intended solely for the internal
use of R3 and may not be provided to any other person or entity without the
express written consent of the client. While every effort was made by the
students to ensure accuracy and completeness, neither the Ivey Business
School nor the report authors are able to warrant the degree of accuracy or
completeness of this report. This report was prepared on a best-effort basis
and is intended to be of assistance to management only. The reader should
not rely solely on the content of the report, to make any business decisions.

11. Disclaimer 52