The emergence of cryptocurrency has slowly but surely made its way into every business sector. Many people still stick to traditional cash transactions despite their convenience and safety. However, recent years have seen a rapid increase in crypto users, especially in the aviation industry. Here is a comprehensive guide to this trend and why the private aviation sector is undergoing an upsurge in digital currency payments.
With technology surging forward with each passing day, almost everyone prefers comfort over other things. Now, convenience does not only mean going on a shopping spree without leaving the solace of the house or ordering whatever the heart desires. It also entails a safe, secure, quick, risk-free, and easy payment process.
Blockchain: Revolutionizing Industries Like Never Before
It is nearly impossible to be unaware of ‘blockchain’ or ‘cryptocurrency’ in the present day. You must have heard these words more than twice, even if you do not know what they mean or serve. So, are blockchains and cryptocurrencies the same thing?
It is entirely okay if you also get confused between the terms. Blockchain and cryptocurrency are very much interlinked. In essence, blockchain is a technology that powers several cryptocurrencies like Bitcoin, Ethereum, etc. It is a fundamental structure that permits digital currencies to function.
Around 15,000 businesses accept crypto (Bitcoin and Ether) payments. With the rapid growth in the cryptocurrency market with no foreseeable sign to cease, other sectors have begun to recognize its significance. However, the transition to digital currencies proved to be the most beneficial decision for the private aviation industry in general.
The aviation industry covers all the aspects of air travel and the various activities that assist in facilitating it. It encompasses the entire airline industry, research companies, aircraft manufacturing, military aviation, etc. So now, the question arises, why is this sector benefiting the most from digital currency?
Continue reading the article to know why cryptocurrencies, in the aviation sector notably, are so favored and if it is time for you to embrace this trend!
Growth Of Cryptocurrency In Aviation
For many, cryptocurrency is nothing more than a digital asset. Initially, it was introduced as a safe, decentralized, and efficient alternative to fiat currency. However, with the emergence of new cryptos, people have begun to utilize them with their intended purpose, i.e., an easy and better way to pay without using cards or bank transfers.
Cryptocurrency in the aviation market enables an immutable and shared ledger owing to its blockchain technology. It assists in tracking assets like airplanes, airport infrastructure, MRO (Maintenance, Repair, and Operations) infrastructure, information, datasets, etc., recording transactions, and provides a sense of security to both aviation businesses and passengers.
As per the CNBC Millionaire Survey, approximately 83 percent of millennial millionaires own cryptocurrencies. Moreover, these millennial millionaires plan to increase their bulk of crypto wealth this year. In 2020, the global blockchain market in the aviation industry stood at $0.42 billion. The number is estimated to cross $1.15 billion by 2030, with a CAGR of 11.1 percent.
Further, 2021 ended with an increase of 178% in the global crypto population, rising from 106 million in January to 295 million in December. The growth rate of 13% in 2021 was strategically higher than in 2020.
Why Is Crypto Becoming So Popular In Aviation?
The private aviation sector often faces various hurdles regarding bookings and taking payments for charters. To understand why cryptocurrencies are exponentially rising in this sector, let’s learn about a few issues or obstacles that pave the way for these digital payments:
1. Last-Minute Bookings
Private flights accompany the benefit of booking a ticket whenever the need surfaces, whether it is an important business meeting or a pleasant family vacation. Moreover, brokers generally vouch for their clients to operators when they receive a flight request in the nick of time, as an aircraft only leaves the tarmac when the entire payment arrives.
However, with the rising number of private plane passengers, the number of last-minute bookings also seems to increase, making it challenging for operators to accommodate timely payments.
Cryptocurrencies readily rule out these problems. Clients can make payments whenever they desire, from any location, using digital currencies as they take only 3-15 minutes to process without requiring an intermediary bank.
2. Low Limits And Declined Payments
Many private jet companies and clients face issues due to declined payments. Bank cards with low limits often require clients to split the amount into multiple transactions. It often triggers their anti-fraud filters, leading to declined payments or failed transactions that further cause a lot of frustration when one is in a hurry.
However, one can avoid such situations by deploying cryptocurrencies. Where maximum security and high limits are a standard, one does not have to stress over transferring substantial funds.
3. High Commissions
Single Euro Payments Area (SEPA) is a traditional method to transact payments in Euros between two different bank accounts present across borders. The process is as easy as making domestic bank transfers. However, when one has to move or make payments globally, they have to incur high international card charges. Although the clients of private aviation companies are not estranged from the high costs, international cards can instantly increase the total expense by 3 percent.
Besides promising speed and efficiency to process and make smooth payments, cryptocurrency comes as a fortune with its lower and cheaper fee payment for transaction processes, no matter the size or the geographical area involved in the transfer.
4. Inefficient routine
One of the crucial tasks in the aviation sector is maintaining an up-to-the-minute ledger. In addition, however, it asks for periodical inspection and scrutinization of various components of an aircraft to figure out their utilization rate and condition.
Cryptocurrency is powered by blockchain, implying that companies must adopt adequate technology to support digital currency. Blockchain helps reduce the time spent on routine inspections and maintenance by continuously updating the leader with each part’s condition and usage in an aircraft. It streamlines maintenance visits and eliminates the wastage of hours on repetitive tasks. Additionally, it generates predictive analytics, enabling operators to minimize their inventories.
Although cryptocurrencies continue to rise in popularity and will certainly proceed in the coming years, it is surprising that many people are still wary or alien of their presence. A huge reason behind the rise in crypto payments was undoubtedly Covid-19.
It acted as a catalyst, coercing businesses to adapt modern, international, and efficient strategies in making transactions and facilitating customers. However, it proved to be a profitable transition. And as the new generation plans to digitize their transactions, industries refusing to accept this well-regulated and secure form of currency will lose a large segment of clients and customers.
Aviation requires radical optimization time-to-time to keep its services meticulous as it is one of the most regulated sectors. And even though many are not in terms of cryptocurrencies’ potential, they can undoubtedly revolutionize the airline industry.