Airlines and Airports Are Using Cryptocurrency

The cryptocurrency craze is making its way into the aviation sector, as airlines and airports announce an embrace of digital finance.

In January this year, Brisbane Airport (BNE) announced that digital currencies will be available to use for their stores.

Heralded as the ‘world’s first cryptocurrency airport‘, BNE partnered with TravelbyBit whose blockchain system will allow travelers to use Bitcoin, Ethereum and more to dine and shop. It came just after Bitnet and the Universal Air Travel Plan (UATP) announced a partnership allowing 260 airlines to accept Bitcoin as a payment option.

Some ‘Bitcoin-friendly’ airlines with UATP include Qantas, American Airlines and Lufthansa. Storm X, the company behind crypto app Storm Play, also announced that travelers can buy first class plane tickets with cryptocurrency, partnering with ‘I Only Fly First Class’ to make it happen.

In February, the Venezuelan president even announced ‘Petro’, the world’s first sovereign cryptocurrency, backed by the nation’s crude oil, gas and metals. Airlines there have the option to sign up to the new currency as payment for their services.

It’s not entirely surprising. Bitcoin’s market capitalisation amounts to around $US100 billion.

Cryptocurrency in airports and airlines carry many benefits

Travelers do not have to worry about cash. They can use their digital wallet to fly through the skies and airports. There are even options to covert unwanted frequent flyer miles to digital currency.

Not to mention, cryptocurrency payments avoid (for now) exchange rates, which makes it overall more efficient to move across borders.

For large airlines, transferring funds peer-to-peer to avoid central banking “can help conclude transactions in minutes”, according to The National.

What about using Bitcoin to actually finance the construction of aircraft? There will need to be a large backer with an international presence willing to invest. And obviously, it will need to be heavily regulated.

It is easy to see aviation giants such as Boeing and Airbus using their massive amounts of resources and global client base to facilitate the ‘crypto-construction’ of brand new aircraft models. It is also exciting to imagine using digital currencies to finance large construction projects such as new airports. We may even use it to launch passengers into outer space.

But not without risk.

But crypto-financing of large-scale aviation projects is unlikely to develop to its fullest potential without proper knowledge of what cryptocurrency is and legislation to regulate it.

Mainstream investors say they are unwilling to invest so much in Bitcoin itself because it is too lightly regulated. Many perceive it as way too unstable.

Nobody has experienced booms and busts as much as the regular Bitcoin investor. September 2017 saw a record high just below US$5,000. It then lost a third of its value in less than a fortnight. By October, it doubled again and reached about $US6,000 in value.

Bloomberg just announced that Bitcoin is “the biggest bubble in history” and is about to pop. A finance law and regulation professor also opined that the sheer lack of regulation could cause another financial crisis. It is thus no wonder why aviation – an industry so reliant on international trade and finance – has not become cryptocurrency’s most willing customer.

Governments have not tackled cryptocurrency regulation as much as they should, but there are some developments. Regulations are being developed in the EU and in the United States. A recent U.S. Securities and Exchange Commission statement emphasised that securities law applies to cryptocurrency exchanges. Israel’s taxation authority has also taken action to treat Bitcoin as a virtual currency for the purposes of taxation. They are to tax it as an asset, not a currency. Profits made on digital currencies will be subject to a 25 per cent capital gains tax for private investors, and a 47 per cent marginal rate of businesses.

Observe the near future.

The future of aviation cryptocurrency finance technology is definetly worth keeping an eye on. As BNE develops its business as a crypto-airport, observe to see its implications on the sector and the State’s economy.

We caution our clients to think about the implications of using cryptocurrency to invest in airport construction projects. Seek proper financial advice before undertaking any commitments.