One of the most advanced (or at least loudest) attempts to integrate blockchain into travel booking has thrown in the towel. After seven years of trying to develop a crypto-based, independent distribution and booking marketplace for airlines and hotels, Winding Tree ceased operations and released its code to the public.
In a long open letter, CEO Maksim Izmaylov expresses his frustrations and blames himself for the failure. Unsurprisingly, he projects most of these accusations onto others.
Winding Tree was expected to bring huge savings to the industry by shifting distribution and bookings from an oligarchy of companies to the decentralized blockchain. As an added bonus, the company would enable payments via cryptocurrencies, further reducing overhead.
In reality, almost no one cared. Or they didn’t believe it was possible. The end result is the same.
The failures come from two sides. First, cryptocurrencies remain predominantly a field of gambling and illegal activities. Even Izmaylov admits: “I was discouraged when I realized that there were no projects that would offer anything remotely useful to a ‘normal person’ (a person with no experience with cryptocurrencies). So far, the only use case of cryptocurrencies is gambling, which includes buying tokens in the hope that the price will rise.”
Second, the value of blockchain as a platform has not yet developed sufficiently. Its integration and operation remain too complex and expensive an environment, despite long-promised improvements in implementation costs, transaction speed and service costs. Repeated, highly publicised cases of fraud also do not make it any easier for a large company to embrace the concept.
Izmaylov alternately blames the ignorance of industry executives (“Another challenge was the time it took to explain the capabilities of blockchain, sometimes weeks or months. Many gave up before realizing its true value.”) and the industry’s legacy technical debt. He indirectly admits that the technology is simply not ready for enterprise-level operations (“We quickly realized that the travel industry, which was technologically challenged, so to speak, was nowhere near ready for the challenges that came with crypto and that it is still trying to overcome.”), but frames this as a failure of the travel industry, not a failure of blockchain and cryptocurrencies.
Even when Winding Tree managed to attract partner airlines, these deals rarely involved the supplier being integrated into the crypto ecosystem. Air Canada’s distribution agreement with the company only provided access to the airline’s Direct Connect API. The same was true of American Airlines’ agreement with the company. Any sufficiently motivated and qualified distribution partner can ensure this.
One particular anecdote recounted in the letter is particularly telling. Izmaylov harshly criticizes a reporter from Phocuswire for covering the industry without actively using cryptocurrencies. In fact, he suggests that the reporting is dishonest due to a lack of specific personal experience: “There is an assumption that journalists are honest people who try to get to the heart of the issues they write about… Of course, she never tried to do anything crypto-related. To this day, I am confused by this.”
Other Blockchain Travel Games
Winding Tree wasn’t the only player trying to capture a slice of the travel market, although its goal of providing a distribution and payments platform was arguably the most comprehensive. But other companies have had more success with smaller efforts.
The most notable success may be Air Baltic’s foray into NFTs for its loyalty program. CEO Martin Gauss is a staunch fan of NFTs and blockchain, and the airline has developed a (technically, if not financially) successful loyalty program on blockchain. Similar efforts by Etihad (selling elite status via a non-transferable NFT) are far less mature.
IATA jumped on the bandwagon in 2018, touting blockchain as a way for airlines to save money when processing payments around the globe. It would skip middlemen, saving everyone involved time and money. And it would be supported by an organization they all do business with anyway. Its current status as a program is unclear.
Singapore Airlines’ attempt to improve integration with partners in 2018 was mostly buzzwords. Emirates successfully integrated with a loyalty program partner via blockchain in 2019.
Air Europa managed to sell a seat on a flight as an NFT. After several test searches, the option no longer appears on the website. There is no reference to NFTicket or NFTs on the airline’s help page.
That so few efforts really benefit from decentralization or on-chain development is telling. Even the IATA solution could be delivered via simple settlement between its members, rather than depending on a decentralized platform. Loyyal’s admission that it didn’t really need blockchain in its Emirates implementation was surprising, but arguably aligns with Izmaylov’s observation that nobody really cares about decentralization:
It turns out that this is not a sought-after feature… A senior executive at another company admitted in a fit of honesty, “Max, we only use words like ‘decentralized’ for marketing reasons!”
Does blockchain have a future in the travel sector?
Izmaylov concludes his commentary with a hint of hope: “Now we just need to wait for a critical mass of crypto-savvy travel companies to enter the market. I’m talking about people who are genuinely interested in the benefits that decentralization brings.” Unfortunately, even after about a decade of this discussion, no one has yet developed this broad, legitimate use case, and it’s not for a lack of investment in the space.
Maybe there is something in the offing, but that seems extremely unlikely.
More about blockchain in the travel world
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