STARTUP STAGE: Aeropaye uses blockchain to automate airline refunds

Aeropaye

Aeropaye automates the processing of refunds for delayed or cancelled flights, using distributed ledger technology, smart contracts and NDC.

Founded in 2019, the company is based in Nigeria and will soon test its prototype with a TMC in South Africa and Ethiopia.

What is your 30-second pitch to investors?

Aeropaye is developing an autonomous smart flight refund engine for airlines, travel agents, travel management companies and passengers on delayed or cancelled flights, integrating distributed ledger technology, smart contract components and the IATA direct connect New Distribution Capability (NDC) protocol. We compete in the growing airline ticketing industry valued at $776.9 billion.

We are similar to the IATA coin and Travacoin, but Aeropaye in-built a hybrid escrow-integrated system that gives autonomous refund on delayed or cancelled flights and a “buy now pay later” for flight tickets. Currently we are about to test our prototype with the largest travel management company in South Africa and Ethiopia.

Describe both the business and technology aspects of your startup.

Aeropaye uses blockchain distributed ledger technology (DLT) and NDC components to streamline airlines’ ticketing processes. A billing and settlement plan (BSP) link is the central point through which funds flow between travel agents and airlines, meaning travel agents do not have a direct relationship with the airlines and all transactions are consolidated through the BSP. Agents make payments to the BSP, which then makes one consolidated payment to each airline, covering sales made by all agents in a particular country or region. The Aeropaye infrastructure is aligned with the legacy system through the IATA direct protocol new distribution capability.

Give us your SWOT (Strengths, Weaknesses, Opportunities, Threats) analysis of the company.

• Strengths
  • Secured, fast and low-cost accounting, billing and settlement plan in co-delivering travel products and services.
  • No need for intermediaries
  • Automation by means of smart contract 
  • Accessible worldwide for travel agents, TMCs and passengers
  • Highly secured and transparent
• Weaknesses
  • At early stage, we need to rely on external (Oracle’s) blockchain second layer protocol
• Opportunities
  • Availability of a huge market and heterogeneous data, pushed in the blockchain by different aviation actors.
• Threats
  • Micro-regulations from the government to consider blockchain and smart contract dangerous.

What are the travel pain points you are trying to alleviate from both the customer and the industry perspective?

Airline tickets are stuck in a technological bottleneck. Coordinating purchases, transfers, settlements on delayed and cancelled flights and payments across hundreds of airlines, agencies, and countries is expensive and inefficient under the current system.

The Aeropaye DLT component is an amazing technology that allows for easy, near instant, trustless collaboration between different parties with a common goal. These difficulties of the travel industry is the perfect environment to apply it in. Aeropaye travel tickets smart tokens have immediate benefits like fast transactions, instant settlements, and more efficient collaboration between all the parties.

So you've got the product, now how will you get lots of customers?

Aeropaye customers are online travel agencies, travel management companies and airlines. We provide them automated, integrated, self-executing cancel and refund workflow processes, integrated with the ticketing platform. No more unhappy customers chasing the money and no manual work spent trying to keep-up, only instant, automated, elegant transfers of digital assets based on easy to understand smart contract rules. We enable all the parties we've partnered with to get ahead of their competition.

Tell us what process you've gone through to establish a genuine need for your company and the size of the addressable market.

The market size measured by revenue of the global airline ticketing industry is $776.9 Billion in 2021. The market size of the global airlines industry is expected to increase 13.2% in 2021. The Africa IATA open air arrangement will boost traffic, drives economies and create job. The survey suggests that if 12 African countries opened their markets and increased connectivity an extra 155,000 jobs and $1.3 billion in annual GDP would be created in those countries.

How and when will you make money?

• Ticket fare transaction charge
• Escrow flight cancellations redeem request charge
• The Aeropaye “buy now pay later” on flight ticket installments. If users default payment or change their travel plans, everything they’ve paid (minus the initial deposits) will be credited to their Aeropaye account, with one calendar year to use the money on a different flight.

What are the backgrounds and previous achievements of the founding team?

Mustapha Tijjani, founder and CEO/product development, is a hands-on entrepreneur who has spent his entire career immersed in technology and its revolutionary effects. Mustapha’s ambition to adapt and advance as an early adopter of incipient technology has led him to blockchain technology and artificial intelligence. While applying his experience on digital currency, he founded Agriiuncoin, a multi-asset pegged digital currency on the Agriiun Exchange, and Aeropaye, autonomous smart flight refund engine on cancelled flights for aviation. He is an alumni of Y Combinator. 

Mannir Dikko Bala, co-founder and head of operations, is a hands-on entrepreneur who founded a decentralized gold exchange for trading gold in fractions on blockchain technology, cutting out intermediaries across the gold supply chain. Mannir has years of experience in the hotel and hospitality sector and agro/comtech. 

Johnny Thorsen, co-founding partner, is a global travel technology evangelist in the corporate travel and mobile world with proven ability to start new business or develop new services within large companies as well negotiating and closing "impossible deals" between global enterprise buyers, startup suppliers and major established industry players. His background is in software services ranging from actual code writing to marketing of new products and services and creation of completely new business models with associated go-to-market strategies and significant disruptive innovation resulting in new customer value creation. 

How have you addressed diversity and inclusion within the business so far?

Although practicing inclusion and bolstering diversity are good ethical business practices, the aviation industry also stands to benefit from boosting its diversity with a combination of DLT and NDC.

What's been the most difficult part of founding the business so far?

DLT/NDC is not just a set of technical challenges, but also requires a total industry mindset shift. It requires airlines to take back control of their relationship with customers by evolving their role as travel retailers. This means redefining their relationship with customers and how they innovate and sell their own products using technology to adapt to the new fast-moving age of commerce where the customer and not the product is at the center. Making this system work, however, requires a new level of technical sophistication, involving more direct access to the end customers through direct third-party partnerships, while at the same time creating more agility. 

Generally, travel startups face a fairly tough time making an impact - so why are you going to be one of lucky ones?

Aeropaye autonomous smart flight refund engine is not just for ticket fare payment, all the billing and settlement and accounting reconciliation is automated on smart contract. Aeropaye mitigates the time between payment being sent by customers and received by airlines. And it enables customers to call off their flight booking and receive instant refunds up to a certain time before a flight. 

A year from now, what state do you think your startup will be in?

We aim to have all the major airlines in sub-Saharan Africa adopt the Aeropaye direct connect protocol.

What is your end-game? (Going public, acquisition, growing and staying private, etc.)

Aeropaye is an obsession for the team. At this stage we want to grow and later go public.