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KLM airline to use blockchain solution for intercompany settlement

KLM Netherlands Airline

Dutch blockchain firm unchain.io announced it developed a finance application for the KLM Royal Dutch Airline in partnership with R3 the founder of enterprise blockchain Corda. The solution will enable seamless intercompany settlements between KLM and its subsidiaries. 

KLM is the oldest airline in the world and has several subsidiaries offering cargo and passenger services. As of 2017, the company had €10.34 billion ($11.37 billion) in revenues. KLM Digital Studio, the innovation unit of the company, explored blockchain to enhance internal processes and develop new business models across the KLM Group. 

To this end, the airline worked with unchain.io to develop a blockchain-based accounting system using R3’s Corda blockchain. We requested further details, but didn’t receive them in time for publication.

Amsterdam-based unchain.io has developed the Blockchain Gateway solution, which enables the integration of existing applications and devices with blockchain networks. The company says it is blockchain agnostic, and its platform could be used to integrate any use case or device with any blockchain network. 

“Unchain’s mission is to provide organizations with solutions to simplify sharing data and transacting with their value chain. In the case of KLM, this means digitally transforming the settlement process with its subsidiaries,” said Jelle van der Ploeg, CTO at unchain.io. 

While exact details of which subsidiaries will use the platform were not revealed, the announcement said KLM is working on integrating more units to this blockchain ecosystem. 

“After initial learnings in smaller projects with the Digital Studio, KLM Finance is happy to announce this project, which we see as strategic to simplify our financial processes and to set an example for future blockchain projects that are no longer ‘test’, but have real business impact,” said Dominique Vijverberg, innovation specialist at KLM Finance.

While accounting with subsidiaries is not particularly airline specific, blockchain applications for aviation are on the rise, primarily owing to the industry’s lack of full digitization. Some of the widespread use cases include airline loyalty pointsblockchain tickets, and aircraft parts

KLM parent company Air France-KLM has partnered with blockchain startup Winding Tree for ticket distribution.

Among other initiatives, Airlines Reporting Corp (ARC) is using blockchain to make transactions more efficient and hence increase airline margins. Previously, ARC worked with United Airlines on a PoC for the reporting and settlement of airline ticket sales. 

Meanwhile, IATA is working on an initiative to facilitate digital identities for agents, airlines, aggregators, and passengers through its IATA Digital Certification Authority. It also published a blockchain whitepaper last year, exploring the potential and challenges of the technology for the aviation industry.