Cargo Revenue Accounting: The Road Ahead. Rangan Bhaumik

Transcription

1 Cargo Revenue Accounting: The Road Ahead Rangan Bhaumik

2 Agenda Snapshot of Air Cargo Industry CRA Traditional Practices» Overview of Traditional CRA Functions CRA : Road Ahead» A Comprehensive CRA solution» Future of CRA Systems» Benefits» Deployment Models

3 Snapshot of Air Cargo Industry Size $54 billion Share of total volumes moved 35%. Between , the industry suffered losses of $40 billion. In 2007, the industry returned to profit with $5.6 billion. Global slowdown impacting air freight severely. See recent trends (Source - IATA): Unprecedented 22.6% collapse in air freight volumes in December-08, as export volumes fall 20-30% in the US, Asia and Europe due to overhang of inventory After expanding at 4% earlier in the year, precipitous fall in second half takes 2008 air freight volumes 4% lower than 2007 The bottom of the market has not yet been reached judging by the decline seen in December, particularly for air freight The risk to our 2009 forecasts (freight -13%, revenues -12%) is clearly on the downside Cost Optimisation is seen as the key strategy to survive this trend

4 CRA : Traditional Practices

5 CRA Functions

6 CRA : Traditional Issues Disparate applications to perform end to end CRA ops Separate application for invoicing, proration, accounting Duplication of data entry Manual/partially automated systems Time consuming and error prone Legacy platforms High cost of ownership High cost to support change

7 CRA : Traditional Issues Not able to support/automate ALL functional areas Part shipment processing, Equalization, Bonus, Revenue Sharing etc Constantly changing business needs continuous enhancements to existing systems Complex SPAs, Rating agreements, Taxes, VAT Wafer thin operating margins do not allow airlines to spend on these enhancements

8 CRA : The Road Ahead

9 A Comprehensive CRA solution COMPLETE SOLUTION: One CRA solution for all CRA functions Rating/Pricing (Loose Cargo and ULD, Space deals, Equalisation) Billing (Multi language support, Early billing, CCAs) Proration (Complex SPAs, Part shipments, CC AWBs) Revenue Calculation (Estimation, Trimming, Bonus) Multi hosting (Revenue sharing, Group Airline Handling, single proration engine) Trucking Airmail Feeds to BI systems for Data Analysis

10 A Comprehensive CRA solution Integrated solution Supports industry interfaces CASS Rates Corporate Financial System IDEC Cargo Revenue Accounting Shipper & Non CASS Agents Operational & Flight System Business Intelligence

11 A Comprehensive CRA solution Real-Time Interfaces With Operations System Facilitates rating, proration and revenue at the time of booking Estimates yield at the time of booking With Revenue Management System Provides rating and proration analysis Route profitability analysis

12 Future of CRA System Analytical Features Proration Analysis Analyses SPA performance based on historical data Provides What If analysis Pricing Analysis Analyses the performance of part rate contracts based on historical data Assists while defining new rate contracts

13 Benefits Increased Revenue Integration takes out the risk of inaccuracy, and conflict between pricing and billings Closer integration with Operational system will further improve automation and increase accuracy of results Lesser Rejections due to more accurate data Better management of revenue both operations and accounting will be in sync Better cash flow resulting out of timely data interfacing

14 Benefits Increased Level of Automation Reduces user workload Eliminates errors due to multiple data entry and manual calculations Results in improved process flow Most of the processes are automated, users manage the exceptions

15 Benefits Ability to Estimate Revenue for Transactions that are not Completely Processed Increased accuracy in revenue projections Better planning Actionable Business Intelligence Faster decision making Better planning Improvement in yield

16 Deployment Models : Comparison Matrix Benefits Outsourced Hosted Legacy solution Cost Optimization Economies of Scale Yes Yes No Yes Partial No Reduced IT maintenance Yes Yes No Reduced Manpower cost Yes Partial No Aligned to Business risks Yes Partial No

17 Transcending boundaries