What is next for Interline?

Transcription

1 Improvement Opportunities in Interline Billing and Settlement RAWG What is next for Interline? Daily settlement? Not for a while we want the SIS process to stabilize first However we have to remember that at some point in the near future it is not going to be the settlement process itself that is going to be the obstacle of achieving the vision of daily settlement Passenger billings and rejects, including any attachments, are submitted electronically and can today in theory be handled day by day It is time to look at the internal settlement process for passenger billings in order to optimize cash flow and deliver correct information BS Improvement opportunitiesin Interline Billing and Settlement 2 1

2 Challenges for Revenue Accounting The complexity, competition, and dynamic nature within the airline industry requires more frequent and correct Commercial Information in order for the airlines to make the right decisions Decisions are made on a daily basis based on the latest available information Revenue Accounting is a natural and integrated part of the commercial and financial decision making process within the airline Revenue Accounting must deliver correct and fast information at a low unit cost BS Improvement opportunitiesin Interline Billing and Settlement 3 Challenges for Revenue Accounting Part of the revenue is of course interline, and we all know that the present interline settlement process can take up to 2 years after flown month. SIS has made it possible to reduce this timescale. Other ways to speed up the settlement is using one of the optional simplified billing processes like First & Final, and Simplified FIM Agreements. Alliances and airlines also try to reduce complexity by negotiating Special Prorate Agreements or using some specifically designed processes like Request & Response BS Improvement opportunitiesin Interline Billing and Settlement 4 2

3 Challenges for Revenue Accounting Majority of revenue is settled at prime billing stage even with no special arrangements in place. However, we still see 1st stage rejections raised for about percent of prime billing values, for various reasons. Most of these are common reasons and are typically reflected in the P items submitted every year by different carriers. In order to optimize cash flow and revenue quality, we need to address these issues and remove the need for rejections. SIS Web gives you the opportunity to follow up on RMs. BS Improvement opportunitiesin Interline Billing and Settlement 5 SIS 1st Stage Rejection Overview BS Improvement opportunitiesin Interline Billing and Settlement 6 3

4 1st Stage Rejections: Valuation Error This rejection reason code is used for more than half of the 1st stage RMs in the industry. Valuation Error seems to be used for various types of rejections. Approximately 50 percent of all valuation errors relate to only one value type (i.e. taxes, ISC). In order to streamline the audit of rejections, the industry should make better use of the reason codes available. BS Improvement opportunitiesin Interline Billing and Settlement 7 1st Stage Rejections: Tax Reclaim (1/2) This rejection reason code is used for 20 percent of the 1 st stage RMs in the industry. Rejections raised as in many cases the billing airline do not check the entire itinerary to assess whether exceptions apply (e.g. transit exemption) In addition: Disparity between TTBS and RATD creates discrepancies between collected and billed amounts TFCs imposed by government/airport authorities are often conditioned by information not readily available on the ticket. Increased volume of operating carrier exceptions not recognised in RATD leave ticketing carrier out of control BS Improvement opportunitiesin Interline Billing and Settlement 8 4

5 1st Stage Rejections: Tax Reclaim (2/2) TTBS RATD difference (continued) Numerous agenda items were raised over the years to reduce the consequences of the discrepancy but often failed to attract sufficient support. Questions for discussion Is RATD the best single data source for the settlement of interlineable taxes, or Should we revert back to using TTBS, and if we do, how do we address the issues that made us create RATD in the first place? BS Improvement opportunitiesin Interline Billing and Settlement 9 1st Stage Rejections: Fare Reclaim 1/2 This rejection reason code is used for 15 percent of the 1 st stage RMs in the industry. A rather large part of these rejections concern the interpretation of RAM A2 Paragraph 3 - Applicable fare The movement from tariff coordinated fares to carrier owned fares contributed to the increased disputes in this area. BS Improvement opportunitiesin Interline Billing and Settlement 10 5

6 1st Stage Rejections: Fare Reclaim 2/2 Numerous agenda items have been raised over the years address any concerns but often failed to attract sufficient support. Question for discussion Are the RAM A2 rules on applicable fare selection still in line with the changes happening in the industry for issuance of fares? BS Improvement opportunitiesin Interline Billing and Settlement 11 1st Stage Rejections: FIM Rejection 1/2 This rejection reason is used for 3 percent of the 1 st stage RM volume in the industry. However The value of these rejections is 34 percent of the total rejection value, therefore represent a significant cash flow issue. Changes in the airline operating environment: Carriers are now starting to follow the involuntary reissue procedures outlined in the resolutions Carriers are starting to refuse the receipt of paper tickets including FIM s BS Improvement opportunitiesin Interline Billing and Settlement 12 6

7 1st Stage Rejections: FIM Rejection 2/2 Again numerous agenda items associated with FIM billings are raised every year with more or less success. Question for discussion The simplified FIM billing process outlined in RAM Chapter B11 can be used The FIM replacement solution in an e-ticket environment is the partial exchange/reissue (IATA Resolution 735e, paragraph 6.5). Does that mean this issue is or will be automatically resolved or do we need to discuss it further to find a better proposition? BS Improvement opportunitiesin Interline Billing and Settlement 13 Are there things we can improve now? - Some common bad practices... SIS billings rejected outside SIS 2% of monthly bill Habitual billing at default full fare 5-8% of monthly bill Incorrect migration of billings into SIS < 0.5% of monthly Bills outside time limits without prior consent < 0.25% of monthly Lazy rejection texts 5-6% of monthly bill "..reject prorate difference BS Improvement opportunitiesin Interline Billing and Settlement 14 7

8 These bad practices mean: 17% additional work and cost to correct bad habits and lazy processing by other carriers. a cost we all pay for every day. BS Improvement opportunitiesin Interline Billing and Settlement 15 How can airlines improve? 1. SIS billings rejected outside SIS Serve notice on ICH after migrating to SIS Tell the carrier what they have done.. Educate them Issue correction via billing memo Instruct carrier to work original billings in IS-Web BS Improvement opportunitiesin Interline Billing and Settlement 16 8

9 How can airlines improve? 2. Habitual billing at default full fare Audit item, identify correct fare, reject difference. Tell the carrier what they have done.. Educate them Alternatives agree bilateral simplified billing, fixed rate SPA or Re-protection Agreement for involuntary scenarios A2 Paragraph and Paragraph 3 Bill right first time, save cost of receiving 1 st stage rejection. BS Improvement opportunitiesin Interline Billing and Settlement 17 How can airlines improve? 3. Incorrect migration of billings into SIS RM1 Billed Accepted Difference RM2 Billed Accepted Difference BS Improvement opportunitiesin Interline Billing and Settlement 18 9

10 How can airlines improve? 4. Bills outside time limits without prior consent SIS now flags rejections outside of time limits Carriers may increasingly auto-reject on this flag Courtesy will get you a long way.ask first BS Improvement opportunitiesin Interline Billing and Settlement 19 How can airlines improve? 5. Lazy rejection texts..reject prorate difference Guaranteed to get you a rejection right back. Follow SIS RAM A10 paragraph 2.3 Use SFI 43 SIS Prorate Slip, use supporting documents Use SIS Rejection Reason codes Tell the carrier what they have done.. Educate them BS Improvement opportunitiesin Interline Billing and Settlement 20 10

11 So, to summarise (for billing carriers) Bad practice will always mean the rejections will come back to you it will increase your costs You have to wait longer to complete your accounting You wait longer to publish your revenue It will not save you money it will increase your costs! Bill right first time, all the time. BS Improvement opportunitiesin Interline Billing and Settlement 21 So, to summarise (for billed carriers) Use the flags and RM reason codes to your advantage Migrate to SIS as early as you can Feedback the errors, suggest best practice. Be clear in your rejections educate as well as reject Consider bilateral agreements to simplify settlement BS Improvement opportunitiesin Interline Billing and Settlement 22 11

12 And Finally Bill right first time. Best practice saves everyone time and money Questions? 12

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