About ACH ACH and ICH Participants Over $13B in Receivables net settled in 2014 ACH partners with U.S. Bank to process payments

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1 ACI-NA Finance Business of Airports April 20, 2015

2 About ACH For over 70 years, ACH has provided a low cost facility, for airlines, their suppliers, and other related companies to net settle their accounts receivable balances, up to four times each month Airline owned Operated on a not-for-profit basis 400+ ACH and ICH Participants Over $13B in Receivables net settled in 2014 ACH partners with U.S. Bank to process payments ACI-NA Business of Airports Meeting April

3 ACH Process Up to four times each month Participants submit invoice details through SIS (IATA owned, E-Invoicing Platform) SIS sends file, to ACH, of invoice amounts to be settled Participant retrieves settlement reports via an ACH online application Displays total amounts to be settled, both receivables and payables (if applicable), by Participant ACI-NA Business of Airports Meeting April

4 ACH Process ACH Participants retrieve invoices and supporting detail via SIS ACH aggregates all amounts for settlement Payables and Receivables netted Between 7 and 14 days later, Participant receives one aggregated payment or debit to their U.S. Bank account Reconciles to Settlement Report Participants required to open and maintain bank account with U.S. Bank ACI-NA Business of Airports Meeting April

5 Process ACI-NA Business of Airports Meeting April

6 PFC Settlement ACH Board of Directors requested ACH to establish a PFC Settlement facility similar to ACH ACH Board comprised of senior management from: AA, AC, AS, DL, UA, US and 9K ACH conducted phone interviews with seven Airlines to determine interest: All agreed concept has merit HA, B9, BB and WN very interested ACI-NA Business of Airports Meeting April

7 Objectives Simplify and streamline the PFC remittance process for Airports and Airlines Ensure compliance with 14 CFR Part 158-Passenger Facility Charges (PFC s) Voluntary Participation Participation open to all Airlines and PFC authorized Airports Low cost ACI-NA Business of Airports Meeting April

8 Concept Airports and Airlines establish Agreement with ACH for PFC Settlement Airports and Airlines open account with U.S. Bank ACH Participants already have U.S. Bank account Monthly, Airlines upload file to PFC Settlement application of remittance amounts payable to each participating Airport Participating Airlines fund their U.S. Bank account for total PFC balance due to all PFC Settlement participating Airports ACI-NA Business of Airports Meeting April

9 Concept Cont. Airports and Airlines retrieve PFC settlement report from online application Note: Amounts for demonstration purposes only ACI-NA Business of Airports Meeting April

10 Concept Cont. On settlement day, U.S. Bank debits Airline accounts and credits Airport accounts for aggregated amount PDX would receive one credit of $6,248, via internal wire transfer into its U.S. Bank account Reconciles to settlement report Funds available same day Note: Amounts for demonstration purposes only ACI-NA Business of Airports Meeting April

11 Status Quo Airlines continue to produce and submit quarterly reports to Airports Possible future enhancement to automate reporting Enabling single source distribution of reports for participants No change to airline collection compensation proposed Proposal streamlines and simplifies processes ACI-NA Business of Airports Meeting April

12 14 CFR Part 158 Compliance CFR Regulation Response Issuing Carrier shall be responsible Funds are never transferred to third party. for all funds from time of collection to remittance Funds remain in Airlines U.S. Bank Account until transferred to Airports U.S. Bank Account Covered Carriers may not comingle PFC funds with other funds Remittance shall be no later than the last day of a calendar month Collecting Air Carrier reporting requirements Collecting Carrier recordkeeping and auditing If a Covered Carrier is an existing ACH Participant, it will be required to establish separate U.S. Bank account for PFC s Settlement to occur no later than 5:00 p.m. EST on the last day of each calendar month, or in the event of a holiday or weekend, the next business day No changes No changes. Expectation is that ACH may need to confirm balances for auditors ACI-NA Business of Airports Meeting April

13 Benefits Airports and Airlines benefit from a streamlined process that eliminates much of the administrative burden Airports Potentially quicker receipt of funds Eliminates processing of paper checks Eliminates risk of lost checks Single deposit into bank account Provides detailed reporting in PDF or CSV format for easy upload Airlines Reduced postage costs Eliminates cost of issuing paper checks Eliminates risk of lost checks Single debit from bank account Known and trusted process Ability to claim refunds when no sales to offset ACI-NA Business of Airports Meeting April

14 Contract terms agreed to with U.S. Bank Where we are ACH incurring development and ongoing costs Enhancing ACH s system for PFC Settlements Anticipate go live April 2016 ACH introducing to airlines ACH annual conference: Apr 2015 IATA World Financial Symposium: Sep 2015 ACH introducing to airports ACI-NA Global Conference: Oct 2015 ACI-NA Business of Airports Meeting April

15 Tiered fee structure: Large hubs $250 per month Medium hubs $200 per month All others $150 per month Cost Fees (deducted) at same time PFC settlement occurs Line item on settlement report as debit from ACH U.S. Bank Fees negotiated to minimize costs Examples: $25 monthly account maintenance fee; $7 internal wire credit fee; $15 auto standing wire transfer fee; $20 monthly online banking current day balances and; $25 monthly online banking prior day balances ACI-NA Business of Airports Meeting April

16 Next Steps Development Testing Contract Airlines and Airports User Documentation Training Website Progress updates ACI-NA Business of Airports Meeting April

17 Questions Contact: Lori Tully, Secretary Treasurer Phone: ACI-NA Business of Airports Meeting April