Interlining allows customers to fly on multiple airlines using a single ticket. This process currently relies on IATA as a central invoicing system, resulting in high transaction costs, clearance times of over 11 days, and currency restrictions. Implementing blockchain could reduce these costs and inefficiencies by allowing instantaneous settlement with no single point of failure, reducing fees by at least 0.01% and saving airlines $4.8 million annually. The proposed solution aims to streamline the interlining process and provide cost savings for airlines through blockchain technology.

1. Airline Interlining
2.0
Reducing operational costs of interline
invoicing through Blockchain technology

2. What is interlining?
In commercial aviation, interlining is the process which allows
customers purchasing multi-route tickets to fly on multiple airlines over
the course of their travelling. This is accomplished by code-share
agreements between airlines, facilitated by IATA which acts as an
invoicing system (Szakal, 2013).

3. The Problem
1. Systemic risk in the interlining process due to due to a centralised model
2. Calendar-based batch-processing creating administrative back office problems
3. Settlement is restricted to 3 currencies
4. Transaction clearance times takes several days (11+ days, IATA, 2012)
5. High transaction costs to airlines- 0.09% for $10m+ annual transactions

4. The Solution
By utilizing blockchain technology in this process, we can decrease fees, streamline processing and provide a better
service through instantaneous settlement.
1. No single point of failure. Blockchain would reduce this risk by removing the single point of failure
2. Administrative back-office clearance process problems reduced through efficiency, providing airlines the option
to streamline staff costs
3. No need to go through FX processing/netting by using a crypto-currency as main settling currency
4. Main costs are the initial set-up costs of the blockchain, as maintenance costs will be minimal
5. Transaction clearance times of minutes instead of days

5. Market
Total interlining $USD transaction
value in 2015 (IATA, 2016)
IATA market share of interlining
$54.3bn
6.8bn
Estimated global commercial air
passenger trips in 2016 (IATA, 2016)
Competition
89%

6. Financials
We anticipate revenue growth due to the increase in routes offered by
airlines and look to increase market share through new airlines joining
IATA. Participation fees may need to increase to cover initial costs of
creating the framework.
The project’s goal is to reduce operational costs of processing
interlined invoicing (staff, IT operations, licences, hosting).
0.09% Fee * 89% Market Share * $54bn Annual Interlining Transactions = $43.25m
If fee can be reduced by even 0.01% = annual savings to airlines of $4.8m

7. Investment
Initial investment will be will be used to set up the technical
requirements and hire the staff to build the system.
Significant cost-savings over the long-term, as maintaining the
nodes on the blockchain require little maintenance.
Invest small to save big.

8. The Team
Expertise
● Aviation
● Asset Management
● Banking
Bashar
Software architect for IATA, has significant experience
in the financial clearing and settlement systems.
Broad knowledge of the airline industry.
Ross Bernado Anil Paul
● Telecommunications
● Payroll
● Ticketing

9. Through blockchain we can diminish fees, streamline processing and
provide a better service through instantaneous settlement.
Take this chance to soar or face the real risk of a bumpy landing when you
see your financials compared to competitors who invested in blockchain
technology.

10. Further Reading
● IATA, (2016), ‘IATA Multilateral Interline Traffic Agreements (MITA)’, available at:
http://www.iata.org/whatwedo/workgroups/Pages/mita.aspx, date accessed 18/07/16
● IATA, (2016), ‘IATA Clearing House’, available at:
http://www.iata.org/services/finance/clearinghouse/Pages/index.aspx, date accessed 16/07/16.
● IATA, (2012), ‘Integrated Settlement ICH & SIS Your Solution to more cost effective billing and settlement’, available
at:
https://www.iata.org/services/finance/sis/Documents/Presentations/1st%20IS%20Week/ICHUG7-Integrated-Settle
ment.pdf, date accessed 16/07/16
● Szakal, A., (2013), ‘Interline and code-share agreements’, available at:
http://www.aviationlaw.eu/wp/wp-content/uploads/2013/09/Interline-and-code-share-agreements.pdf, date
accessed 18/07/16.
● Smith, A., (04/04/16), ‘The world's busiest airports - Dubai overtakes Heathrow’ , available at:
http://www.telegraph.co.uk/travel/lists/the-worlds-busiest-airports/, date accessed 18/07/16.