DISRUPTIVE TECHNOLOGIES

REPORT ON IMPLEMENTATION OF BLOCKCHAIN IN SINGAPORE

AIRLINES

Submitted By

Navmeen Latif – 2027644

 BLOCKCHAIN TECHNOLOGY
Blockchain technology is a distributed database of records or shared public/private ledgers of all
digital events that have been executed and shared among Blockchain participating agents
(Crosby et al. 2016). The information transferred from A to B is stored as a block and added to
the existing transaction chain. Once the unique record is created, it cannot be erased. The
technology allows a decentralized, immutable, and transparent approach towards the data which
is cryptographically stored.

      

A verified transaction may include cryptocurrency, contracts, records, or other information. The
main objectives of Blockchain technology are :

 Digitally recording and distributing the information being shared

 Preventing alteration of data by using the cryptographic hash function
 Providing a decentralized network and preventing third party intervention
  Speeding up the information flow process by using a transparent approach

Algorithms :

 Hash algorithm: When a transaction is initiated, it is provided with a hash code and then
forwarded to all the nodes connected on the network.
 Proof of work: it is used to validate the transactions and add new blocks to the existing
chain. Miners perform this task.
 Public Key Encryption

Fitment in the legacy systems: Blockchain Technology is not meant to fit as a middleware into
the systems but to provide a continuous flow of information from the ERP systems to distributed
ledgers/records. While implementing Blockchain Technology into the business model, it still
requires the legacy systems as it just sends the data into the chain or receives data from the chain.

SINGAPORE AIRLINES

Singapore Airlines is one of the best airlines in the world with a five-star certification known for
its quality and service. The airline flies to more than 60 destinations worldwide. In the
competitive industry, Singapore Airlines is known for its outstanding service onboard and
customer loyalty programs.

Companies often lay greater emphasis on retaining the already existing customer than gaining a
new one as the latter costs five times more than the former. For this purpose, companies use
customer loyalty programs. Such programs reward customers who frequently purchase or use the
services in the form of discounts, freebie, etc. Customers often receive reward points which they
redeem later while buying products or services from various partners of the company. Loyalty
Programs increase customer retention, decrease marketing costs, improve customer purchases of
the brand, build trust between customers and the company through special recognition (Barton et
al. 2019).

One such type of customer loyalty program used by Singapore Airlines is KrisFlyer, a program
for frequent flyers of Singapore Airlines.KrisFlyer allows members to earn KrisFlyer Miles,
which they can spend while booking flights, hotel rooms, online shopping, and much more.
Singapore airlines being a member of Star Alliance, its customers do not only earn and spend
miles while traveling through Singapore Airlines but also to fly with other partner companies of
Global Star Alliance like Air New Zealand, Thai Airways, Lufthansa, Air Canada, United, and
more.

KrisFlyer - A Customer Loyalty Program

To join KrisFlyer, a customer has to visit the official website and online fill in the form, which is
free of cost or any fee. Once signed-up, a customer can start earning miles. Members can earn
miles by either flying with any airlines from Star Alliance or even booking hotels who have
partnered with Singapore Airlines or other airlines from Star Alliance Partners.

As Singapore airlines are a Star Alliance member, its customers receive and spend miles travelin
g via Singapore Airlines, as well as flying with other Global Star Alliance partners such as Air N
ew Zealand, Thai Airways, Air Canada, Lufthansa, and others.

Members can earn miles from the KrisFlyer when they book a hotel through Agoda and a range
of hotel loyalty chain programs such as Accor Live Unlimited, Hilton Honors, IHG Rewards
Club, World of Hyatt, etc.

KrisFlyer miles can also be earned while booking a car on Avis, Price, Europcar, Hertz, Sixt, and
Grab. Reward points can also be transformed into KrisFlyer miles for Singapore Airlines if you
have a Grab Account.

In addition to numerous Singaporean credit cards, Singapore Airlines has agreements with banks
and card issuers worldwide, enabling buyers to convert their credit card points in KrisFlyer
Miles.
Redemption of KrisFlyer miles KrisFlyer is done in many ways. For example, booking tickets
from Singapore Airlines, SilkAir, Scoot, and other affiliate airlines and upgrading tickets, paying
with miles for hotel stays, rental cars, KrisShop.com transactions, and point conversions.

BLOCKCHAIN TECHNOLOGY IN SINGAPORE AIRLINES – KrisPay

Digital Wallet

Loyalty and reward programs are crucial ways in which retailers engage their customers and
remain competitive. The customer loyalty blockchain model increases the value of points to
loyalty program participants and adds additional value to partners by enabling trustworthy
transactions. There is a more consistent interaction between the participants in this network, and
points are in the central place to link all participants.

In 2018, Singapore Airlines launched the KrisPay, a miles-based digital wallet. It enables
members to convert their KrisFlyer (frequent flyer) miles to KrisPay miles for regular purchases
with merchants around the island. Members can use their miles by scanning the Quick Response
Code (QR) issued at any participating outlet. Initially, Singapore Airlines partnered with 18
companies, including restaurants, beauty parlors, gas stations, and some retailers, including
LEGO store outlets across the country. More partners are signing up every day.

Software Development & Implementation: To put together an extensive network of

program participants, the airline needed a comprehensive framework that would include both a
distributed record of who spends what and where and help prevent unnecessary reconciliations
between participating partners. With the support of its technology partner, KPMG Digital
Village, Singapore Airlines has been working with Microsoft to create a decentralized, highly
secure Blockchain transaction ledger on Microsoft Azure. To improve the underlying blockchain
network, the airline used Azure App Service, Azure Cosmos DB, and Azure Feature, enabling
users to interact with the ledger and to synchronize off-line activities. The Azure Active
Directory B2C and Azure Key Vault have also been used to manage access, secure data across
the shared network, and provide a solution that works with all existing systems and databases of
partners. The KrisPay blockchain environment for the company, an iOS and Android mobile app,
and websites for both customers and partners took just six months to complete.

The software development took place by Proof of Concept Development carried out by KPMG
Digital Village. It is a general approach which involves the testing of certain assumptions to
ensure that the idea is feasible, viable, and realistic. In other words, it shows whether the
software product is suitable for the solution to a particular business problem. POC helps to
prevent potential complications and technological issues and allows you to gain useful input at
an early stage of the development cycle, thus reducing unnecessary risks.

Need for the technology: Occasionally, customers do not earn enough miles to redeem
them, or often the task of redemption is laborious and filled with convoluted restrictions.
Technology that would instantly interact with the partners and allow the customers to utilize their
miles for something useful was required in the Singapore Airlines. A need for tokenization of the
frequent flyer miles was felt so that these reward points become an asset for the members, and
they can utilize them even if they had a minimal amount in their wallets.
Fitment in the business model: The key concept of loyalty programs is to enhance the
unique experience of the customer, which results in customer retention. Among all the
technologies available, Blockchain is a perfect fit for Singapore Airlines to improve its KrisFlyer
Loyalty Program. Blockchain technology addresses several issues by providing new ways to
manage, secure, and centralize data from the loyalty program. Blockchain technology not only
enables reward points to be redeemed safely and automatically but also streamlines the
production and sharing of miles through retailers and programs. With a transaction log that is
tamper-proof and time-stamped, retailers can efficiently and transparently protect and track
loyalty program transactions. As a result, it will reduce the costs of complicated loyalty systems
and eliminate both mistakes and fraud.

First-order effects :

 Use of technology minimized due to the decentralized nature of Blockchain

 Cost reduction in the implementation and running of loyalty programs
  Gained popularity as Singapore Airlines became the first airline to introduce a digital
wallet
 A decrease in fraud and dispute
 Simplified financial systems

Second-order effects :

 The company can re-invest the miles or sell them for an equivalent amount of cash
 Singapore Airlines can sell its unused miles/tokens when the stock prices go up
 Elimination of physical cards like credit cards, debit cards, etc
 An increased footfall of customers
 Higher chances of customer retention
 Loyalty programs with more transparency
 The airline is reviewing Azure Blockchain Technology, the latest Microsoft controlled
blockchain technology, which will help to minimize the manual effort of developing and
maintaining the underlying infrastructure in blockchain technology.
 Job elimination

Third-order effects :

 Cathay Pacific and its reward program, Asia Miles, launched "Unlock More Miles," a
blockchain-powered campaign.it was a dining promotion campaign.
 Air New Zealand is looking to use Blockchain for baggage tracking and in its loyalty
program.
 Lufthansa is launching the "Aviation Blockchain Challenge" in partnership with SAP to
encourage ideas related to blockchain implementation in air travel.

Regulatory Policies: The terms and conditions of the KrisPay Digital Wallet are regulated by
and interpreted as per the Laws of the Republic of Singapore and are solely subject to the
jurisdiction of the Singapore courts.

Technology Innovation: Blockchain is a disruptive technology in the field of air travel.

Blockchain in airlines is capable of enhancing customer interactions by eliminating significant
steps such as boarding, reimbursement for delays, and baggage tracks in the current flight
system. Blockchain and Big Data integration, an automated booking process, tokenization of
miles, and security enhancements all can have significant impacts on the industry.

Managerial Implications :

 Blockchain-based Ledger Technology requires preliminary information to train

Algorithms. As it deals with big data to run loyalty programs, Managers need to build
resources and data collection opportunities inside their IT Infrastructure with sufficient
labels and groups to ensure that data is accessible smart algorithms available.
 Managers need to seek for blockchain developers and Blockchain Project Managers to
train the employees and also to learn how to manage such projects and implemented
technologies.
 Managers need to explore more skilling and training resources and also make them
available to employees directly interacting with the Blockchain technology within the
company. Some basic knowledge related to java,c++, python, etc. is required.
 Under the division of work, all the financial activities are transferred to the technology.
At the same time, the workforce is needed to manage energy sources required during
mining and also for decision making related to new applications and innovations.
 Managers need to look for new innovative ways of using technology. For example, in the
case of blockchain technology in Singapore airlines, they can use it for baggage tracking,
checking in, etc.
 As Blockchain has the potential of replacing many jobs within the company, managers
have to maintain clear communication among the workforce to avoid chaos. Initially,
implementing Blockchain is a challenging task, as massive data shifting is required.
Managers need to keep their workforce aware of specific challenges that they may follow
during the process.

ISSUES & SOLUTIONS

 Bootstrapping: Shifting current contracts or corporate documents/frameworks to the latest
technology based on BlockChain involves an essential number of migration tasks to be
performed, which may involve cost and time.
 Scaling: The size of BlockChain-based current digital services is a challenge. Before
running your first process, you will need to download and validate the entire set of
BlockChains.The number of blocks will increase exponentially for hours or longer.
 Change in behavior: Change is positive, but resistance to change persists. Customers need
to be made acquainted with the fact that their digital transactions are stable, complete,
and safe in the world of non-tangible trusted third parties introduced by BlockChain.
 Fraudulent activities: Due to BlockChain's pseudonymity, hackers may use technology
for fraudulent activities like money trafficking. But law enforcement authorities can track
these individuals and prosecute them with appropriate legislation and technological
assistance.
 Quantum Computers: Due to the lack of computing resources, a single party cannot
dominate the blockchain technology. However, the potential emergence of Quantum
Computers makes it possible to break cryptographic keys. But the keys would also
become much secure so that they are not easy to break.
 Power Usage: By its very nature, Blockchain uses ever-increasing amounts of computer
storage and power (Deshpande et al. 2017). The benefits of reliability resulting from the
use of Blockchain should, therefore, be balanced against the financial and environmental
costs of heavy power use.
 REFERENCES

1. Barton, S., & Raiborn, Cecily, PHD, CMA,C.P.A., C.F.E. (2019). CUSTOMER
LOYALTY PROGRAM FRAUD. Strategic Finance, 101(6), 32-39.
2. Archana Prashanth Joshi, Meng Han, Yan Wang. (2018), A SURVEY ON SECURITY
AND PRIVACY ISSUES OF BLOCKCHAIN TECHNOLOGY. Mathematical
Foundations of Computing, 1 (2) ,121-147.
3. Jayant Dev Srivastava, Naman Kumar, Harshit Bisht. (2019),BLOCKCHAIN FOR
LOYALTY REWARDS PROGRAM MANAGEMENT. Journal of the Gujarat research
society,21(7),92-100.
4. Michael Crosby, Nachiappan ,Pradan Pattanayak, Sanjeev Verma, Vignesh
Kalyanaraman. (2016),BLOCKCHAIN TECHNOLOGY-BEYOND BITCOIN,Applied
Innovation Review,2,6-19.
5. Fischer, Dov,(2018), Ethical and Professional Implications of Blockchain Accounting
Ledgers, Brooklyn College,1-13
6. Paul Sillers.(2018),HOW AIRLINES ARE USING BLOCKCHAIN TO UNLOCK
FREQUENT FLIER MILES,Independent.co.uk
7. www.singaporeair.com
PLAGIARISM REPORT