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Singapore Airlines to turn frequent flyer air miles into cryptocurrency using blockchain

Singapore Airlines is set to use the new technology behind Bitcoin, known as blockchain, to revolutionise its frequent flyer programme KrisFlyer.

The airline, which is a member of the Star Alliance frequent flyer network, will introduce a new blockchain-based loyalty digital wallet which will allow members to spend their KrisFlyer air miles for point-of-sale at limited retail outlets.

The new KrisFlyer digital wallet app, which is expected to launch early in 2019, was developed through a collaboration between the airline, KPMG Digital Village and Microsoft. Singapore Airlines is initially signing up retail merchant partners who will accept the miles as currency in Singapore. The KrisFlyer digital wallet is managed using a private blockchain that will be exclusive to Singapore Airline’s partners.

They say blockchain will enable members to spend their miles in a greater variety of ways. A spokesperson said: “Although some schemes have forged partnerships allowing points to be widely redeemed it is still true that in general an airline loyalty point can’t be used beyond booking flights. This can be frustrating for travellers and is also a problem for the industry. Any unspent loyalty points must reside on an airline’s balance sheet as a liability, which can hamper capital raising and investment.”

It features developments by San Francisco-based start-up Loyyal. While blockchain and Bitcoin has experienced great scalability problems as transactions have exploded in number, a private blockchain for loyalty points that doesn’t live or die by its transaction times, distributed network security or anonymity seems to be an ideal use of blockchain. We’ll have to wait and see what develops but the involvement of Loyyal is certainly encouraging as they have a reliable track record in this area where there are so many unfulfilled promises.

“Loyyal’s vision sees travellers accessing loyalty points in real-time. Imagine landing from a long flight and having points credited to an app immediately that could then be used to pay for a ride sharing service from the airport. Interoperability will increase to such an extent that a loyalty scheme for an independent hamburger restaurant could easily integrate with major schemes, reducing friction, improving the consumer experience and encouraging commerce. In essence, enabling access to the ‘long-tail’ for loyalty schemes.”