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BitLease An Ethereum -based S olution to Leased Aircraft Audits

BitLease An Ethereum -based S olution to Leased Aircraft Audits. Team 8: Andres Florez, Paul Lee, Junaedy Liem & Lyanna Lim.

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BitLease An Ethereum -based S olution to Leased Aircraft Audits

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  1. BitLease An Ethereum-based Solution to Leased Aircraft Audits Team 8: Andres Florez, Paul Lee, Junaedy Liem & Lyanna Lim

  2. Like a digital twin the Dave Treat mentioned. There are issues such as getting a complete inventory of the current planes but as we discussed, I guess they routinely do this. Would be interesting to see if the regulatory provisions for inside a plane the same as for critical systems. Need a bit more information on the specifics of the blockchain implementation. 82/100 Very nice.

  3. Problem: Current leasing process is highly convoluted Multiple parties generate records in aircraft leasing Record review is challenging due to a lack of organized and reliable database Manu-facturer • Review of physical documents • Rebuild aircraft maintenance history • Verify signatures in maintenance documents of internal auditors vs. regulator’s database • Identify possible modifications to records Aircraft MRO Service $ Aircraft Lessor Airline Lease Compliance report $ $ MRO service External auditor MROs Records Current leasing process generates multiple, independent records that mandate costly audits at the end of each lease 2

  4. Solution: BitLease will solve cumbersome aircraft lease audit process BitLease eases record storage & auditing BitLease enables immutable record keeping that benefits lessors & lessees Manufacturer • BitLease is an aircraft leasing implementation of Ethereum • Enables & enforces smart contracts between lessors, lessees and all other leasing parties • Immutable records on private, permissioned blockchain enables faster, cheaper audits MROs Airline Records Records Records Bitlease BitLease reduces the cost and time of aircraft leasing audits 3

  5. Solution: BitLeasewill simplify the aircraft leasing industry Blockchain: a game of winners and losers How Bitlease Works Regulator • Airlines (lessees) and aircraft owners (lessors) will benefit from reduced audit costs, immutable record of service, transaction confirmation efficiencies (from days to minutes) and higher consistencies Any repair and maintenance work is recorded onto the blockchain. The transaction is verified only if all relevant parties agree, i.e. consensus The regulator monitors maintenance records and validates signatures of airlines’ internal auditors. Lessors Manufacturers Smart Contracts on Ethereum Airlines • External auditors will be partially displaced; disintermediation occurs • Abusers will be discouraged to undertake fraudulent activities MROs The manufacturer adds the model, aircraft identification number, and maintenance records to the aircraft template as permitted by the smart contract. The internal auditor registers the aircrafts’ maintenance records onto BitLease. 4

  6. Solution: High feasibility due to market structure and existing technology • Once leading lessor adopts BitLease, airlines will follow • Lessors are few and concentrated: Top 10 lessors have 66% market share • Air lease market growth is high: CAGR of 6% through 2021 Requires only one lessor buy-in • Lessors have significant information asymmetry once aircrafts are on lease, see value in a common database • Physical audit is mandated by international aviation agencies – process must be done and is highly expensive Simplifies processes for regulators & lessors Leverages existing Technology • Solution exists in already-established blockchains (eg: Quorum, Smart Contracts & Digital Twins) • Airlines already use internal software for MRO purposes • Guarantees privacy to all parties involved 5

  7. Implementation: A deployed product will be available in 5-7 months Definition Development Proof of Concept Deployment Expansion • Identify lessor and airline • Clarify business process • Define development guidelines • Develop software • Develop storage system • Develop user interface • Develop training materials • Develop test scenarios • Perform tests • Make adjustments • Train personnel • Launch application • Monitor progress • Expand to other airlines • Expand to other lessors 1 month 2 - 3 months 1 month 1-2 months 5 months 6

  8. Future Work: Potential Upside for other Applications • Oil & Gas Equipment: • Oil & gas companies which lease drilling rigs and crews from oil-field services companies can utilize blockchain to record equipment lease and equipment repair and maintenance. • Heavy Industrial Equipment: • Lessors and lessees of land drilling and excavation equipment, heavy construction machinery etc can utilize blockchain to keep records. • Medical Equipment: • Hospitals and clinics which rent medical devices for fixed-term use can keep records on the blockchain ledger. • Container Ships: • Charter owners (lessors) and liner companies (lessees) can also utilize this blockchain technology to keep records of lease contract conditions and repair records 7

  9. Risks & Mitigation: Mitigations plans have been formulated for high risk issues 8

  10. Financials: We require $770k in exchange for 30% share in BitLease 9

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