Blockchain: The Future of Tracking Aircraft Parts?

Blockchain: The Future of Tracking Aircraft Parts?

Suspected Unapproved Parts (SUPs) is the FAA’s polite term for counterfeit aerospace parts — almost always of inferior quality — that have made their way into the supply chain, and into aircraft. If an MRO unintentionally uses SUPs, the dangers range from unexpected technical issues, causing Aircraft on Ground delays, to aircraft failures and fatalities.

SUPs are just one issue in the aircraft part supply chain. Another challenge for aircraft operators and MROs to contend with is the theft and resale of legitimate parts. The same is true for authentic parts that are either unserviceable or too old for use, whose provenances are then forged so that they can be resold to unsuspecting customers.

One possible solution to these problems is to assign every legitimate part a unique, easily accessible and fake-proof digital identity that accompanies it from manufacture to eventual disposal/destruction. Fortunately, such a solution already exists: Blockchain.

Mark Roboff , CEO and co-founder of SkyThread, stressed that aviation blockchains are private, not public and very different than those that are used in crypto.  Image by Joy Finnegan.
Mark Roboff , CEO and co-founder of SkyThread, stressed that aviation blockchains are private, not public and very different than those that are used in crypto.
Image by Joy Finnegan.

Originally created to provide a public ledger system for the sale and ownership of cryptocurrencies such as Bitcoin, the secure accounting software that underpins Blockchain can be used to track and authenticate all kinds of real and virtual properties, including aircraft parts.

Blockchain Basics

First things first: What exactly is blockchain? According to the Lisk Foundation, the nonprofit group behind the Lisk blockchain application platform, “Blockchain owes its name to how it works and the manner in which it stores data, namely that the information is packaged into blocks, which link to form a chain with other blocks of similar information.”

“It is this act of linking blocks into a chain that makes the information stored on a blockchain so trustworthy,” according to the foundation. “Once the data is recorded in a block it cannot be altered without having to change every block that came after it, making it impossible to do so without it being seen by the other participants on the network.”

Saravanan Rajarajan, Ramco
Saravanan Rajarajan, Ramco

Saravanan Rajarajan is director of aerospace & sefense aolution consulting & presales at Ramco Systems. He offers a simpler answer: “Blockchain can be described as a digital way of managing information neutrally for all by decentralizing it, thereby ensuring that the information cannot be manipulated.”

Mark Roboff, SkyThread
Mark Roboff, SkyThread

Mark Roboff is CEO and co-founder of SkyThread, a company that is building a blockchain data exchange network for commercial aviation. “I believe it’s very important to highlight that the blockchains being used in aviation are very different from those that are used in crypto,” he noted. “Aviation blockchains are private in nature, not public. Information in an aviation blockchain will be secure, controlled by the data owners and originators, and only available to those that data owners grant access to see.”

Blockchain in an Aviation Context

Blockchain can provide a trustworthy, robust solution to tracking all kinds of items and information, and this includes aircraft parts. They can be given distinct digital blockchain identities by recording their serial numbers along with all the data created about serialized parts — including transactional data, maintenance records, and 8130 tags.

Aircraft parts can be given distinct digital blockchain identities by recording their serial numbers along with all the data created about serialized parts — including transactional data, maintenance records and 8130 tags.
Aircraft parts can be given distinct digital blockchain identities by recording their serial numbers along with all the data created about serialized parts — including transactional data, maintenance records and 8130 tags.

“Serialized parts are already tracked per regulatory requirements,” said Roboff. “The issues blockchain solves include reducing the costs associated with tracking those parts, and avoiding the costs (which are very substantial) that occur when parts can’t be suitably tracked via today’s offline and often disorganized means. Hundreds of millions of dollars in perfectly good, serviceable parts are being scrapped or set aside because of missing data, which is required to sign off on airworthiness. Creating an industry recording of all this data eliminates this in its entirety.”

The efficiency of this solution explains why accounting and consulting firm PricewaterhouseCoopers is working with airlines, OEMs and MROs to evaluate blockchain’s use in the aviation industry, along with larger digital strategies such as digital twins and data analytics.

Blockchain is particularly well-suited to aircraft parts registration, tracking and authentication — even across multiple owners and territories — because it is “a distributed digital ledger,” said Scott Thompson, PricewaterhouseCoopers’ Global Aerospace and Defense leader. “Each transaction, or ‘link’ in the chain is recorded and securely locked. This information is then shared on a ledger to users with access or permission to the information.” Since transactions recorded in blockchain ledgers are “securely locked very quickly, it is considered nearly impossible to hack, therefore creating a reliable and trusted source of information,” he said.

Scott Thompson, PwC
Scott Thompson, PwC

This strong resistance to hacking means that parts with blockchain identities can generally be trusted to be what they claim to be. The reason: “Blockchain creates an immutable, shared ledger that can provide a history of parts transactions back to manufacture,” said Roboff.

In contrast, “the reason fraud can exist today is because the tracking of parts as required by regulators is offline, disjointed, and fraught with mistakes,” he said. “Bad actors take advantage of this scenario by passing off old parts as new, or by forging 8130 tags. Again, it’s about the data more than the physical part itself. By having everything in a secure blockchain, we eliminate the vectors in which fraud can occur, solving what you correctly identify is a critical safety risk.”

SUPs or stolen parts won’t be able to pass the blockchain test. Their falsified documentation won’t stand up to a search of the appropriate blockchain ledger, if they appear in it at all.

Jeff Staub, Maine Pointe
Jeff Staub, Maine Pointe

“Blockchain promises to give aviation consumers the confidence of knowing the provenance of the parts they want to purchase,” said Jeff Staub, CEO of Maine Pointe, a global supply chain and operations management consulting firm. “It has the potential to be a single source of truth to monitor each part through every transaction that it goes through. In doing so, blockchain makes it easier to automate and collaborate in the platform, systems, and parts procurement process across the aerospace industry, especially when it comes to multi-party arrangements (e.g. JVs, fragmented ownership), MRO, performance-based logistics, and maintenance efforts.”

Aviation Blockchain in Action

Let’s get specific about what blockchain could do for aviation.

“At this stage, blockchain is only being used in aviation in very limited test cases,” noted Thompson. “However, the technology is being evaluated because blockchain has the potential to create an enormous data-lake for aircraft information. This information could be used to automate many transactions which are currently manual, thus improving efficiency and accuracy.”

“For example, blockchain has the potential to provide a complete dataset about every aircraft and every flight,” he said. “It could tell you the history of every part of an aircraft — and there are tens of thousands of parts on an aircraft and its engines.”

Blockchain is particularly well-suited to aircraft parts registration, tracking and authentication — even across multiple owners and territories — because it is “a distributed digital ledger,” according to PricewaterhouseCoopers’ Scott Thompson. The ledger can then be shared with trusted users. PwC image.
Blockchain is particularly well-suited to aircraft parts registration, tracking and authentication — even across multiple owners and territories — because it is “a distributed digital ledger,” according to PricewaterhouseCoopers’ Scott Thompson. The ledger can then be shared with trusted users. PwC image.

Additionally, blockchain could tell aircraft part consumers the entire history of every single part that they buy. This could include “where it was made, who were the workers that made the part, every aircraft and flight that part has been on, where it was maintained, the exact maintenance procedures, who performed the maintenance and where, and their credentials and work history of those employees,” said Thompson. “This information could provide essentially a digital twin of the aircraft.”

Finally, the data collected can be used to spot SUPs at any stage of the procurement process. “Fake parts entering the aviation stream is a real concern for safety, and for military aircraft national security in particular,” he observed. “So having confidence in the source of a part is very valuable.”

Blockchain Benefits

Without a doubt, Benefit No. 1 is restoring trustworthiness to the parts procurement, inventory and usage process. Blockchain incorporates both aspects of the proverb that President Ronald Reagan liked to quote about arms negotiations with the Soviet Union: “Trust, but verify.”

The key to blockchain’s trustworthiness is its use of a distributed digital ledger. “Blockchain has certain properties inherent in its design that enable data to be trusted by multiple parties without there being a central organization managing the data,” Roboff explained. “This enables a shared source of truth.”

“Blockchain information cannot be manipulated due to the system’s underlying cryptographic technology,” said Rajarajan. “This technology makes it extremely difficult to manipulate the data, including data that is vital from an economical or airworthiness standpoint.”

At the same time, the data within a given blockchain ledger is collected from every single user of the system as they use it. This ensures that users have access to a reliable snapshot of every component in the system in near-real time.

The second benefit offered by blockchain being used for aviation parts tracking is based on the data it collects, which reflects the actual lifespans, performance, and problems of parts within the system. This data can be harnessed to improve predictive maintenance for aircraft, rather than using rigidly defined service/replacement schedules that may be more strict than necessary, and thus cost aircraft owners/operators more money and downtime than needed to keep their airplanes safe.

“By utilizing blockchain to store information that can be assessed using data analytics, it allows us to make much better predictions about that aircraft and its individual components,” Thompson said. “By deploying data analytics and developing artificial intelligence to crunch all of this data, you can improve predictive maintenance and improve aircraft availability, while reducing Aircraft on Ground situations. After all, there are currently mandatory maintenance schedules for aircraft and their components that provide built-in safety buffers. But these maintenance schedules are imperfect, which is why the airline industry still experiences many flight disruptions due to unscheduled maintenance.”

A third area where blockchain could make a difference, and one that is very relevant in a time of overstrained supply chains, is supply chain management. “Start with availability challenges that we are living through with the global semiconductor shortage,” said Staub. “Then factor in the conflict between Ukraine and Russia that is impacting nickel, titanium, tantalum that is used in aircraft parts and capacitors, and others. There are real issues for the aviation industry about how to gain visibility and influence across a multi-tiered and complex supply chain. A blockchain system could help provide a common, trusted and accurate source of visibility to where, how much, and what is the allocation methodology for available demand, while also detecting SUPs and other counterfeits.”

Again, SUPs are a real issue for the aviation industry and one that is difficult to manage using current approaches.

A case in point: Back in the 1990s, the U.S. Department of Defense established a “Trusted Foundry” program to identify and ensure dealings with trustworthy IT suppliers. Unfortunately, the number of microelectronics purchased by the DOD is minuscule when compared with the industry’s other customers. “As a result, they haven’t been investing,” said Mark J. Lewis, then-director of defense research and engineering for modernization at the Pentagon, during a 2020 presentation reported on the DOD’s website. “The chips that we buy, the microelectronic components that we buy from those trusted foundries, are in some cases two generations behind what’s available on commercial state-of-the-art.”

To make matters worse, the trusted foundry approach left DOD open to security risks at a supplier level. “We’ve seen a number of examples where the biggest threats that we face often are the insider threat,” Lewis said. “It’s the people inside the fence line, behind the guards, who we think we’ve cleared. They’re the ones that pose the biggest threats to us.”

As a result of these issues, the DOD has abandoned the Trusted Foundry approach and moved to a “Zero Trust” model instead. This approach assumes that every single part the government buys is suspect until proven otherwise by validation and verification testing.

“You depend on data, you depend on validation and verification, you depend on standards that will make sure that what you have has no surprises, doesn’t have back doors that are going to injure you or damage you, and doesn’t act in a malicious way,” said Lewis. “We’re actually extremely comfortable now — we believe that the technologies already exist for us to be able to do that.”

Staub characterized the DOD’s past and current attempts to keep SUPs out of its equipment as “a very expensive and tedious process. Blockchain would be an option for managing this problem in a much more seamless and efficient way.”

Safety enhancement is a definite blockchain benefit. “Aviation is already incredibly safe — about one in every 16 million flights has a fatality — but data analytics enabled by blockchain could further improve safety,” Thompson said. “Yet again blockchain could lower costs by reducing unnecessary maintenance while improving aircraft availability — thus reducing the disruption, cost and customer service issues associated with unscheduled maintenance.”

Obstacles to Blockchain Deployment

With blockchain offering all these benefits for aircraft parts control, an obvious question emerges: How soon can the aviation industry get this system into place?

It could take awhile, said Thompson, and not just because the system’s software and IT infrastructure have to be fleshed out. There’s also the question of who’s going to pay to build a blockchain system (or systems) for the aviation industry, plus how its ongoing maintenance and operations will be paid for.

“Even in a highly automated environment, there is still a cost to collect and maintain data,” he said. “Then the question becomes: How much of this information is really valuable and worth collecting? Perhaps it is best to just start collecting information that is believed to have the most value, such as data on Life Limited Parts, and expand from there.”

Other issues to be resolved: Who gets access to this data, and under what conditions/restrictions? “Before an airline, OEM or MRO will choose to share their data, they will want to know who gets access, how it will be used, and how they get compensated or otherwise derive value from their data,” said Thompson.

Then there’s the issue of human greed and self-interest: “How will suppliers and customers try to use the data to gain an advantage in commercial transactions?” he asked. “There’s a lot of potential for distrust in the supply chain that could impair the blockchain process. The key is to create win-win scenarios for everyone where airlines can improve reliability and reduce cost, while at the same time OEMs and MROs can increase margins, but that’s easier said than done.”

One way to ensure a level playing field is to create a unified blockchain system for the aviation industry, with a “neutral custodian” accepted by all players in charge of it. “SkyThread is poised to be that neutral custodian — a company of the industry but not in the industry; i.e. not an airline and not in the supply chain,” said Roboff. “With this setup, aviation stakeholders can work together without exposing competitive interests or conflicts.”

One last obstacle to blockchain deployment, which won’t come cheap, is competing priorities. “For the past two years, the aviation industry has been focused on liquidity and surviving COVID,” said Thompson. “Post-COVID, there is an enormous emphasis on achieving net zero carbon emissions by 2050, or sooner. That’s also going to take a lot of resources — and it’s a market imperative. Of course, there are other priorities as well, such as upgrading aircraft.

“So, the question becomes: How much investment, in time and money, can the industry afford for blockchain development considering competing priorities, and therefore how quickly can it move?”

Where Blockchain Stands Now

Just how close is the industry to an actual blockchain deployment?

“It’s very early days,” Thompson said. “There have been a limited number of blockchain experiments in the aviation industry and those have been internal — namely testing the technology for data collection.”

At Ramco Systems, “we are working on proof of concept to demonstrate the use of blockchain to digitally track and record the movements and maintenance history of parts across airlines, lessors, original equipment manufacturers such as engine producers, logistics suppliers, and maintenance providers,” said Rajarajan. “Results are promising, and we are addressing the challenges of standardization.”

“Blockchain itself is only one element of realizing adoption: It’s getting everybody to come together to agree on what the standards and information should look like,” Staub said. “They also have to agree on how to fund it, and be willing to work together, which can be a problem given the competitive nature of the industry. The capability and infrastructure of the supply chain also dramatically falls off as you transition from OEMs and prime contractors to Tier 2, 3, and 4 suppliers.”

Thompson isn’t even sure that blockchain will catch on. “I firmly believe that the aviation sector will increasingly develop data-lakes and data analytics to improve the safety, reliability, and cost of aviation,” he said. “But it’s still very unclear whether blockchain technology will be dominant or some other technology. It’s also very unclear how fast this will develop, given the challenges around data sharing and competing priorities.”

All these factors considered, blockchain — or an equivalent system — does offer a way for the aviation industry to resolve issues associated with aircraft parts registration, tracking, usage and security.