The distributed ledger technology will help the industry to save up to $1 billion on transactions. The pilot version may be launched as early as January.
The payment system has been created on commission from the International Air Transport Association (IATA) by the Laboratory of Cryptoeconomics at Perm State University. The system uses a proprietary digital token named IATA Coin. The price of the cryptocurrency will be pegged to the US dollar. All transaction data and history will be stored in a blockchain.
“IATA will issue virtual coins for payments between air companies. A blockchain will be used to register transactions. This technology will guarantee data security and lower the risks. Making payments directly without intermediaries will help airline carriers to reduce transaction time from weeks to minutes and minimise the costs,” the head of CryptoLab and CEO at the international fintech startup Lykke Sergey Ivliev told 59.ru.
Using the blockchain for mutual transactions would allow 10% reduction of air companies’ expenses due to minimised banking and currency exchange fees, according to the developers.
The pilot version of the system may be launched as early as January 2017. The IATA provides financing for the project, whereas two air companies, yet undisclosed, are endorsed to test the system, Lykke’s representative Elena Mechenkova explained.
In December 2016, the airline company S7 in collaboration with Alfa-Bank for the first time in Russia made a letter of credit transaction using smart contracts in the Ethereum blockchain.