Blockchain fixes this
Anyone who’s ever sold their home will know about the mountain of paperwork that’s required to transfer large assets: title deeds, conveyancing reports, legal contracts and so on.
Now imagine what it’s like when you’re selling a commercial aircraft. As well as being much more valuable than the average home – a ten-year-old narrowbody jet might set you back $30 million – these are assets that literally jump around the globe on a daily basis, spinning a web of paper trails in each and every country they’re operated from.
Factor in the staggering amount of maintenance work that’s needed to keep planes airworthy – all of which must be properly documented – and you can see how the business of trading aircraft is a bureaucratic nightmare.
That will always be the case.
But, according to Dublin-based startup BlockAviation, there is at least room to streamline and automate much of the necessary complexity – just as long as the aviation industry is willing to embrace blockchain technology.
“The aircraft is not worth anything without a fully coherent paper trail,” BlockAviation’s chief executive, John Roberts, told me. “So we’re building a network to manage all of that.
“We’re looking at the actual aircraft itself. And then all the parts that are on that aircraft. And then utilization reporting, which is one of the things that lessees [companies such as airlines that rent aircraft] must do every month. At the moment, lessors [companies that loan out aircraft] are updating their asset management platforms ad hoc [with reports that] come in on email and PDF.
“We can network that and we can keep it on the network.”
BlockAviation has signed up four customers to date – including lessors SMBC and Aircastle – who collectively have 1,200 aircraft under management. That’s about 5% of the global fleet of 25,000 commercial planes.
Leasing companies are an obvious target for the startup as they tend to take delivery of brand new aircraft straight from the manufacturer. These units are placed with a succession of customers across the globe under short-term operating leases. They are typically then sold after about a decade – by which time their value has fallen sharply, but they’re still commercially viable as passenger jets.
Older aircraft also have some residual value – though it’s largely based on the plane’s prospect of being converted for cargo operations, or being scrapped for metal and components.