The parent company of the state’s biggest rural airline has created a cryptocurrency to reward fliers with a digital token that, according to plans, could soon be traded on exchanges like Bitcoin is today.
Officials with Ravn Alaska say the FlyCoin token will serve the purpose of a traditional airline loyalty program, giving travelers value for miles flown.
But as they envision it, the cryptocurrency will have broader purchasing power and be redeemable for cash, like Bitcoin.
The concept is unusual in the airline industry, said Lenny Moon, chief executive of FlyCoin, a newly created company and affiliate of Ravn Alaska.
At least one airline, from Asia, created a cryptocurrency reward program, but its value was limited because it was not an asset that could be traded, said Moon.
“With this, you could trade it, get cash for it, it doesn’t expire, it’s yours, you own it,” said Moon, a former Wall Street investment banker.
Josh Jones, an entrepreneur from Los Angeles and an early pioneer in Bitcoin, is lead investor and chairman of FLOAT Alaska, the parent company of Ravn Alaska and FlyCoin.
The airline rewards industry is “past due for a digital transformation,” Jones said in a prepared statement from FlyCoin on Wednesday.
Jones is overseeing the development of FlyCoin, Moon said. FlyCoin recently raised $33 million from investors in an early step, Moon said.
Moon was previously involved in other startup companies including Payoff, a financial technology company that provides loans to help people pay off credit card debt.
The digital currency company is the latest venture pursued by FLOAT Alaska. This year, the company is also planning to launch a new international airline, Northern Pacific Airways. The airline will operate previously retired Boeing 757-200s to fly between Anchorage and Asian and U.S. destinations, according to plans.
Leadership with FLOAT purchased the assets of RavnAir Group out of bankruptcy in 2020, launching Ravn Alaska. The leadership had been developing FLOAT Shuttle, a new Southern California air taxi, created as an alternative to rush hour traffic in the Los Angeles area. FLOAT Shuttle has been on pause during the pandemic. Its phone number currently directs people to Ravn Alaska.
Ravn Alaska provides a vital service for rural Alaska communities, connecting travelers with cities on the Alaska road system such as Anchorage and Fairbanks.
FlyCoin tokens will be redeemable for travel with Ravn Alaska and on Northern Pacific Airways, Moon said in an interview on Thursday.
Company officials are also talking with other airlines, hotels, wine clubs and hospitality firms that could serve as partners that accept the cryptocurrency, he said.
FlyCoin plans to have the digital tokens available for trade on cryptocurrency exchanges later this year, broadening its value, Moon said.
Ravn customers currently receive credit in FlyCoin, though the tokens aren’t yet available for placement in digital wallets, company officials said.
FlyCoin should be fully up and running in the coming months, they said. The mileage program that currently exists with Ravn’s partner, Alaska Airlines, will also continue to exist after that point.
The company has minted the FlyCoin tokens using Ethereum technology, FlyCoin said in a statement. Plans call for a fixed supply of 100 billion tokens.
Credit that customers have built up for future Ravn Alaska flights will be converted to FlyCoin.
Chris Gale with Metaedge Ventures, a Los Angeles-based cryptocurrency advisor that has provided consulting to FlyCoin and other companies, said the idea can prevent mileage rewards from sitting around for years unused, since people can trade them on an open market.
Cryptocurrency can be complicated for people who aren’t familiar with it, he said. FlyCoin plans to build an app that will make it easy to use, he said.
One of the benefits of FlyCoin is that it can potentially rise in value, Moon said. It could, of course, also lose value, he said.
Travelers will have the option to cash it out shortly after they receive it, or hold it in hope that it rises, he said.
People will have an option through Ravn to convert it to a voucher right away, if they don’t want to deal with any fluctuation in value, Moon said. The plan is to have agreements with partner companies, such as at hotels, to ensure FlyCoins will always maintain at least a minimum value for redemption of 2 cents per token, Moon said.
Moon said cryptocurrency is growing in use, and airline customers want more flexibility with their mileage programs.
“We’re sitting at this intersection where it makes sense that rewards could convert to cryptocurrency where it’s tradeable on an exchange,” he said.