Survey report simplified interline settlement (sis) - airline preparedness survey wave 1

Industry Research I Simplified Interline Settlement : Airline Preparedness Survey

Simplified Interline Settlement:Airline Preparedness Survey

Contents

Overview

Executive Summary

Survey Participants

Key Findings

Methodology

01

02

03

04

08


Overview: Simplified Interline Settlement (SIS)

IATA states the vision for SIS project as follows:

To fundamentally change, simplify and integrate the interline

settlement process, delivering tangible financial benefits

to the industry.

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? Invoices are electronic and not backed by paper

Prime passenger billings do not require paper invoices

or coupon listings

? IDEC formats are maintained with increased record types

? Passenger rejects, including any attachments, are submitted

electronically without paper

? Cargo and Mail billings are electronic and paperless

? Miscellaneous billings (including any supporting

information) are electronic, whether as data or with

attachments

Settlement action is enabled directly from ET systems

The Simplified Interline

Settlement (SIS) project

aims to simplify interline

billing, and remove paper

from the entire process,

delivering tangible

financial benefits to the

airline industry.

The SIS solution will

encompass Passenger,

Cargo, Miscellaneous,

and UATP interline

billings and ICH

settlements

Industry Research I Simplified Interline Settlement : Airline Preparedness Survey 01

Of course, there are some airline that are doing

everything they can to become SIS compliant, but

there are others who are not even aware what benefits

this industry change brings for the airlines.

Kale Consultants Limited would like to thank all those

who participated in our survey.

The information shared by participants has enabled us

to create a benchmark report which will provide fresh

insights to all those associated with the airline

industry today.

Airlines are citing SIS as a single

platform where they will submit a single

electronic billing file that will be

converted into an invoice and a

settlement file, which in turn will be sent

to the billed airline, and cleared through

the relevant clearinghouse.

Executive Summary

The Simplified Interline Settlement:

Airline Preparedness Survey builds on the insights we

sought and bring together a snapshot of airlines

preparedness for Simplified Interline Settlement (SIS),

which have presented in this report.

Majority of the airlines surveyed have welcomed the

initiative taken by IATA for developing a single platform

for communication amongst airlines.

Some of the world’s major airlines consider SIS at high

priority 80 percent of the airlines surveyed consider SIS

as essential initiative for the airline industry.

There is a lack of clear understanding and need for

training among some airlines related to the changes

required in their present systems to become SIS

compliant.


Survey Participation

The SIS Preparedness Survey saw active participation from Airlines across the globe. A total of 56 airlines from all

continents participated in the survey ranging from network carriers to low cost carriers.

Participation Statistics

Africa 11%

Asia Pacific 31%

Europe 30%

Middle East 7%

South America 7%

Region Wise

Tier 345%

Tier 123%

Tier 232%

Tier Wise

Above 15 Million

Between– 3 – 15 Million

Below 3 Million

Tier 1

Tier 2

Tier 3

Detail

Number of Airline Responded

Number of Person Responded

56 Airline

71 Respondents

Respondents

Profile

Manager Level 69%

Director Level31%

Tier Classification (Passenger carried)


NorthAmerica14%

03

*All percentages are based on Airline responses and not individual responses

Key Findings

Today interline billing process involves sharing paper documents

duplication of efforts. Even moving to e-ticketing hasn’t solved the

problems as rejections and many non ticket-related processes, such as

handling and catering are still supported by paper documents.

Over 200 tons of invoices and supporting documents are being shipped

between airlines around the world each year to support the airlines'

interline billing and settlement process.

Airlines intent for using IATA's Simplified Interline Settlement (SIS)

More than 95% of airlines surveyed foresee various benefits associated

with IATA SIS initiative as it removes the paper and delivers financial

benefits to the airlines.

It involves electronic invoicing, which simplifies interline billing of

passenger, cargo and miscellaneous items.

No, we operate on direct settlement

5%

Airline Willingness for SIS

Yes,95%

80 % of airlines surveyed consider

Simplified Interline Settlement (SIS)

at High Priority



Airlines understanding of changes required for IATA's SIS

The greatest potential of Simplified

Interline Settlement (SIS) comes from

complete redesigning of process flows.

There is substantial business

re-engineering to be done at the outset,

as invoicing often originates from many

sources.

Clear Not Clear Somewhat Clear

Passenger

Cargo

Miscellaneous

Understanding of changes required for IATA's SIS.

66 % of airlines surveyed are in

planning stage for the largest

industry change Simplified Interline

Settlement (SIS)

Airlines are already forming employee

groups and have started planning for

industry changes.

Majority of the airlines surveyed

understand what changes will be required

in passenger system to be SIS compliant,

but lack understanding related to changes

required in case of miscellaneous and

cargo system to become SIS compliant.


34% 16% 50%

29% 36% 36%

16% 43% 41%


Airline readiness for implementing technology changes for SIS

Planning Stage70%

Already in process7%

Not Sure23%

Airlines Readiness

on SIS

In order to be SIS compliant airlines will be required to change their

internal systems and business processes in passenger, cargo and finance

areas.

The return on investment made by carriers in the short term will be

balanced by substantial long-term cost savings.

Airlines using legacy systems or in-house developed systems will

require more than 12 months to get completely ready for IATA’s

Simplified Interline Settlement (SIS) compliance.

Airlines which have outsourced their accounting system to vendors

have shown dependency for technology change.

77 % of the airlines surveyed will

require more than 9 months getting

completely ready for leveraging the

benefits of SIS compliance.


*All percentage calculated are based on Airline response and not individual response

Yes, Completely66%

Not Sure4%

To Some Extent23%

No 7%

Airlines need for Training on SIS

Airlines surveyed consider training is very much required to have a

clear understanding of changes required for SIS, easy to use, and

ideally suited for their applications.

Airline who have hosted their Revenue Accounting (RA) system and

those with Legacy system (developed in-house) have shown keen

interest in training.

Airlines plan to migrate one- by-one as per the system readiness and

comfort in handling.

37 % of airlines surveyed are yet to

take a decision on migration mode

(one – by – one / all together) of

billing categories to SIS


Need for training on Simplified Interline Settlement (SIS)

07


Methodology

Kale Consultants Limited distributed a survey questionaire

to Airline Revenue Accounting Heads and other high-level

executives.

Most of the questions used simple check box, multiple

choice, or ranking format, but there were several open-

ended questions as well. The extensive nature of the

question set was intended to maximize depth of

information rather than breadth of responses. The titles of

many of the charts in this report paraphrase the actual

survey question.

Web based questionnaire (survey window open between July - August 2010)

Respondents answered a variety of questions pertaining to Airline

Prepardness for SIS

Data Collection + Data Analysis

Report


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Dec

20

2010

Survey report simplified interline settlement (sis) - airline preparedness survey wave 1

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