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Cash, Credit or Cryptocurrency?

July 14, 2021

More than just a frequent trending topic on Twitter, cryptocurrency (“crypto” for short) offers the ability to digitize and decentralize financial transactions. That holds the potential to drastically overhaul the global financial system, and business aviation is among the industries at the forefront of driving that movement.

While it may be some time before one can purchase a business aircraft with cryptocurrency, some charter companies accept it as payment in response to customer requests.

“We began hearing inquiries in 2016-2017 and saw there was a demand, and that we needed to change our scope and offer it as an option,” said Justin Crabbe, CEO of Jettly. “Since then, it’s been quite fruitful. Transaction values and frequencies have both increased dramatically in 2021.”

Monarch Air Group was among the first charter providers to offer crypto payment options in late 2017.

“There was a sense back then that it was going to blow up, and it did,” said Monarch Executive Director David Gitman. “We’re all about innovation, whether it’s to improve the customer experience or to enhance our internal procedures. When crypto came up, we embraced it.”

What is It?

Crypto is a form of blockchain technology that records information in a way that makes it difficult or impossible to compromise, by distributing that data – secured with a highly-specialized cryptographic signature – across the broad network of interconnected computer systems on a given blockchain of authorized users.

Rather than holding a tangible physical asset, crypto assigns value to a unique digital code held by the investor. Bitcoin remains the most well-known cryptocurrency, but others such as Ethereum, Ripple and Dogecoin offer the same ability to speed transactions without a central administrator or intermediary, such as a bank.

“Clients shopping around with Bitcoin, funded and ready to go, want vendors who use it. We’ve captured many first-time customers by offering it.”

Justin Crabbe CEO, Jettly

Currently, the overall number of cryptocurrency transactions in charter remains small; Gitman and Crabbe both estimated it’s used for roughly 5% of their respective companies’ monthly transactions. However, availability of that payment option has helped introduce younger, tech-savvy clients to the benefits of private aircraft.

“Clients shopping around with Bitcoin, funded and ready to go, want vendors who use it,” Crabbe said. “We’ve captured many first-time customers by offering it, and several [customers] have converted into routine fliers.”

Gitman noted “a small wave” of new clients when Bitcoin first broke through the $20,000 barrier at the end of 2020.

“We saw a good mix of new and existing customers who rode the ‘wave’ and opted to spend some of it by chartering a jet, but that’s leveled off,” said Gitman. “If I had to guess, I think people now want to hold onto their Bitcoin as an investment, though that’s only my impression.”

Managing Crypto Transactions

Arranging and processing a crypto transaction is little different from a standard credit-card transaction to the charter operator.

“We invoice the client through [our provider], and payment arrives in our account converted to U.S. dollars at the current market rate minus a small transaction fee,” Crabbe said.

“There’s not much difference at all on our side,” Gitman agreed. “Bitcoin is as quick and easy for us to handle as a bank wire or credit card transaction; it’s really not tremendously easier or harder, or much faster than a credit card.”

“Bitcoin is as quick and easy for us to handle as a bank wire or credit card transaction.”

David Gitman Executive Director, Monarch Air Group

While there are other drawbacks to cryptocurrency – including changes in valuation and concerns about the amount of electricity required to support crypto transactions at a time when environmental sustainability is an industrywide priority – both Crabbe and Gitman believe it’s here to stay.

“Offering payment in Bitcoin is a tremendous benefit for brokers,” Crabbe said. “There’s less risk and liability for us, versus a potentially fraudulent credit card transaction. Once a Bitcoin transaction is done, it’s done.”

“Offering payment in Bitcoin is a tremendous benefit for brokers. There’s less risk and liability for us, versus a potentially fraudulent credit card transaction.”

Justin Crabbe CEO, Jettly

“Demand for private jet charter has skyrocketed, and with that we’ll see more transactions in Bitcoin,” predicted Gitman. “People who may be holding onto it right now will spend it at some point, and chartering an aircraft is a great way to do that.”

Utilizing Blockchain in Aircraft Maintenance and Repair

Announced in February 2020, the MRO Blockchain Alliance is tasked with investigating the use of blockchain to track, trace and record the entire maintenance, repair and overhaul (MRO) process – from the manufacturing of parts, through to their installation and repair on an aircraft, as well as the logistics associated with that process.

While portions of the supply chain are now digitized in proprietary databases, air transport communications and information technology firm and MRO Blockchain Alliance partner SITA emphasized the need for a global database to simplify and speed up parts tracking, while also enabling the secure sharing of information between industry stakeholders.

Under the group’s proof-of-concept model, blockchain will be used to record and track two distinct datapoints for each part: (1) a digital thread providing real-time status, chain of custody and back-to-birth tracking of the part, and (2) a digital passport containing the unique identity of a part and other vital data, such as certification of airworthiness.

Matthys Serfontein, president of air travel solutions for SITA, called blockchain “a technology that we believe promises tremendous opportunity for streamlining the sharing and recording of information across the air transport industry. In an industry as interconnected as ours, the ability to share and record common data in a secure way without giving up control of that data is fundamental to driving new efficiencies in air travel. This is particularly true for the MRO sector.”

That belief is supported by a 2019 PricewaterhouseCoopers study that estimated blockchain could increase aerospace industry revenue by as much as 4%, or $40 billion, while cutting MRO costs globally by around 5%, or $3.5 billion.

MRO Blockchain Alliance stakeholders include Bolloré Logistics, Cathay Pacific, FLYdocs, HAECO Group, Ramco Systems, and Willis Lease Finance Corporation, supported by Clyde & Co.

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