Last month, the world’s first NFTicket was sold at auction for over USD 1 million. For those with acronym anxiety, NFTs are a unit of data on a blockchain that can be traded but, as “non-fungible” indicates, are unique and not interchangeable.
Spanish airline Air Europa issued the tokenised tickets. The issuance heralds a significant shift in airline ticket purchases. The technology could bring about a new stage of growth and profitability for airlines by scaling efficiency in areas of cost, sustainability and performance. TravelX, the company behind the NFTickets, was launched in 2021 and boosted by a USD 10 million seed funding round announced last month. The regional challenge is establishing whether Latin America’s airlines, and the technology they use – let alone a serious lack of digital literacy across the region – is sufficient to support regional issuance.
A cryptocurrency specialist based in Mexico explained, “NFTicket issuance is an area of potentially significant growth. Realistically however, it is still a very niche topic which remains limited to a sector of the population that has a high degree of digital sophistication and investment. Of course, this opens a great window of opportunity for other sectors to adhere to this form of commerce, but not everywhere, which is the main challenge to apply NFTs for plane tickets in the next year.”
“NFTicket issuance is an area of potentially significant growth…however, it is still a very niche topic which remains limited to a sector of the population that has a high degree of digital sophistication and investment.”
A cryptocurrency specialist, Mexico
This said, pilot programmes are being progressed to incorporate new transaction alternatives to purchase plane tickets and the tokens are considered part of these vehicles which suggests an NFT future is more of a when than if. Indeed, earlier this month, TravelX announced it had partnered with technology and service provider company KIU Systems Solutions. This will enable as many as 73 airline partners the ability to tokenise and distribute inventory as NFTs, using TravelX’s technology.
The ESG dimension could be an increasing concern. A senior executive at the Association of Travel Agencies of Panama explained, “Although it is true that NFTs appear to be efficient as an exchange system, in terms of environmental sustainability, they conflict with the trend of airlines that today are focused on reducing their carbon footprint. For now, NFTs aim more to be used as a ‘marketing’ tool than as an efficient marketing channel.”
“For now, NFTs aim more to be used as a ‘marketing’ tool than as an efficient marketing channel.”
A senior executive at the Association of Travel Agencies of Panama
Other potential uses for the platform include creation of “NFT passports” for travellers to use throughout their journey. San Marino, for example, last year began issuing Covid vaccination passports with their validity linked to an NFT on a public blockchain. There is a broad trend of NFT adoption across a broad range of industries. in Latin America Last month, Volkswagen announced the launch of its own platform for buying and selling NFTs, ‘Digital Garage VW’, in partnership with Brazil’s OnePercent which develops customised blockchain solutions.
Regulation is another major challenge. The lack of regulation has in part led to the growth of NFTs. In fiscally-constrained Mexico, the government is looking with increasing fervour to regulate and tax online activities, NFTs included – but doing so could impede NFT growth. Such initiatives have little congressional support in Mexico, which is why, at least during 2022, it is difficult for measures of this type to be implemented. Expect NFT growth across Latin America and across a broad range of sectors, but it will take time before it becomes mainstream.