Survey report simplified interline settlement (sis) - airline preparedness survey wave 2
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Transcript of Survey report simplified interline settlement (sis) - airline preparedness survey wave 2
Simplified Interline Settlement Airline Preparedness Survey – Wave 2
Industry Research
Executive summary
Participants detail
Airline’s priority for SIS compliance
Understanding of changes required for SIS Compliance
Training requirements and dependencies
Status in terms of readiness for SIS
Approaches to SIS compliance
Estimated time and budget
Survey objectives & methodology
About IATA’s Simplified Interline Settlement (SIS)
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Contents
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Industry Research I Simplified Interline Settlement : Airline Preparedness Survey - Wave 2
Executive Summary
The deadline for International Air Transport Association's (IATA) Simplified Interline Settlement (SIS) project is fast approaching. Come September 2011, airlines globally will move to the revolutionary new platform that aims to streamline the interline settlement process. Starting with the passenger revenue accounting and miscellaneous (non-transport) billing processes, SIS will also encompass the cargo and UATP processes.
The SIS Airline Preparedness Survey is a Kale initiative to assist the airline industry in its transition. Carrying forward from its learning in the first edition, Wave 2, is built on insights gathered from airline revenue accounting professionals to identify the airline industry's readiness for SIS. The Airline Preparedness Survey - Wave 2 saw a record participation of 82 respondents from 66 airlines across the globe.
The survey shows that majority (82%) of the airlines have initiated and finalized their course of action and budgets for becoming SIS compliant. However, there is still a clear lack of understanding towards the changes required in 'Miscellaneous billing' and 'Cargo' areas. Without proper training and assistance for the implementing the required changes, the industry is currently behind schedule in their SIS compliance initiatives.
During the survey and related interactions with the industry we have found that airlines globally are approaching SIS compliance in various ways. From developing in-house solutions, dependence on vendors for changes, to outsourcing their interline requirements – the options available are multifold. But it is more important to realize that SIS is an ideal opportunity for airlines to relook at their systems and undertake significant business process re-engineering in order to derive the maximum benefits of this industry change.
The breadth and depth of these survey findings help paint a big picture view of the IATA's SIS project, more than just a quick snapshot, the information shared by participants has enabled us to provide fresh insights to all those associated with the airline industry today.
Kale Consultants Limited would like to thank all those who participated in our survey.
Key findings from Wave 2:
ä91% consider SIS compliance as high to very high priority
äOver 50 % respondents are still not clear about the required system changes to become SIS compliant
ä64 % respondents expressed training need to understand changes required for SIS compliance
äOver 50 % of airlines are beyond Initiation and budget finalization stage of SIS readiness
ä53 % respondents shown dependency on RA vendor for implementing technology change
äOnly 19 % respondents expect their system to be SIS compliant before Sep 2011
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Industry Research I Simplified Interline Settlement : Airline Preparedness Survey - Wave 2
SIS Preparedness Survey -Wave 1
JUNE 2010
SIS Preparedness Survey -Wave 2
JANUARY 2011
SIS Survey -Wave 3
JULY 2011 (proposed)
Preparedness
SIS Airline Preparedness Survey - Wave 2
The SIS Preparedness Survey - Wave 2 saw active participation from airlines across the globe. A total of 66 airlines ranging from network carrier to low cost carrier participated in the survey. The online survey was conducted between January and February 2011. The survey data analysis was done in March 2011.
Participants Detail
No. of Airlines from each region Respondents Profile
Size
Annual PAX Count
Tier 1
Tier 2
Tier 3
Above 15 Million
Between 3 - 15 Million
Below 3 Million
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Industry Research I Simplified Interline Settlement : Airline Preparedness Survey - Wave 2
Wave 1 Wave 2
Airline
Individuals
56
71
66
82
Participation : Wave 1 vs. Wave 2
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
South America, 7
Middle East + Africa, 8
Asia, 22
Europe, 20
North America, 9
91%consider SIS
compliance as high
to very high priority
The Simplified Interline Settlement (SIS) project aims to
standardize, facilitate and expedite interlines billing and
settlement in the airline industry. IATA's SIS initiative is
expected to bring substantial business benefits across both
top-line and bottom-line. However it has varied degrees of
prioritization in terms of importance as well as
implementation timelines. There are significant regional
differences, 88 % of the respondents from airlines in Middle
East and Africa region consider SIS as very high priority,
whereas SIS compliance is high priority for American and
Asian airlines. From the last survey – Wave 1 to present Wave
2 there is no drastic shift observed. However, priority level has
certainly increased.
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Airline’s priority for SIS compliance
Priority : Wave 1 vs. Wave 2
Priority:Regional differences
* Base: Those respondents answering - unweighted
Industry Research I Simplified Interline Settlement : Airline Preparedness Survey - Wave 2
Low priority High priority Very high priority
50%Respondents are still
not clear about the
required system
changes to become
SIS compliant
SIS compliance is arguably the most significant and largest
impact to airline accounting in decades. It is mandated for any
airline that settles interline through either ICH (IATA Clearing
House) or ACH (ATA Airline Clearing House). Most airlines are
aware about changes required in passenger revenue
accounting. However, awareness is limited for changes
required in miscellaneous billing system to be SIS compliant.
Over 43 % of respondents understand the changes
required in passenger revenue accounting
Only 17% respondents are aware what changes are
required in miscellaneous billing system to be SIS
compliant
Significant changes observed among airlines in
understanding the system change for passenger revenue
accounting; however this understanding is missing
towards Miscellaneous & Cargo.
ä
ä
ä
Over
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Understanding of changes required for SIS Compliance
Understanding System ChangesWave 1 vs. Wave 2
* Base: Those respondents answering - unweighted
Industry Research I Simplified Interline Settlement : Airline Preparedness Survey - Wave 2
64%respondents
expressed the need
for training to
understand changes
required for SIS
compliance
Airlines across the globe have found different ways to be SIS
compliant. Nevertheless, the basic tasks which need to be
accomplished are the same for all airlines. The results of this
survey give us a representative picture of the status of
training needs among airlines. Training programs need to been
designed in order to meet airline needs.
Only 5 % of the respondents understand SIS related system
changes, whereas other are not sure or to some extent require
training to understand changes in their present system to be
SIS compliant.
Airline respondents who have vendor
provided RA system depend on vendor for
hand holding/training needs. Irrespective of
the approach taken by the airline to become
SIS compliant training need observed across
airline. There are very few airlines have opted
to purchase off the shelf module or replace the
current RA system
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Training requirements and Dependencies
IATA36%
RA Vendor38%
Dependance for Training/ Hand-holding
Both26%
* Base: Those respondents answering - unweighted
Industry Research I Simplified Interline Settlement : Airline Preparedness Survey - Wave 2
At present, Airlines across the globe do not have infrastructure (System) to support the industry change.
SIS compliance is steadily gaining momentum in the airline industry since airlines are aware of the overall impact and the return on investment (ROI) which can be obtained by adopting such technology.
äEurope and Middle East and Africa region based airlines are ahead of others in readiness
äMajority of airlines in South America & Asia are lagging behind in term of readiness
äKeeping the go-live date stated by IATA, airlines are found to be at nascent stage of their preparation level.
Significant regional changes observed are:
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Status In term of readiness for SIS
50%of airlines are
beyond Initiation and budget
finalization stage of SIS readiness
Readiness Status
* Base: Those respondents answering - unweighted
Industry Research I Simplified Interline Settlement : Airline Preparedness Survey - Wave 2
Over
In rapid changing air transport environment, technology has
emerged as a key component in solving complex strategic
issues. Airlines are becoming increasingly dependent on
technology to improve their performance and have found
different ways of implementing technology change to become
SIS compliant.
äMajority (44%) respondents from North American airlines
take lead in developing in-house solution to become SIS
compliant
äAirlines from Middle East and Africa region completely
depend on RA system vendor to provide solution.
äFew respondents from South America region plan to
outsource their interline billing to a 3rd party vendor
äEuropean airline look forward to replace their current RA
system with SIS compliant RA system
Significant regional changes observed are:
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Approaches to SIS Compliant
53%respondents shown
dependency on RA
vendor for
implementing
technology change
Approach to become SIS Compliant
* Base: Those respondents answering - unweighted
Industry Research I Simplified Interline Settlement : Airline Preparedness Survey - Wave 2
respondents expect
their system to be
SIS compliant before
Sep 2011
IATA has set a fixed timeline for all members for their
passenger revenue accounting and miscellaneous billing
system to go-live as Sept 2011, Timely and successful
implementation of IATA's SIS project holds the key toward
future success of this ambitious mission.
Only 3 % of the airline respondents expect their system to
be SIS compliant within 3 month.
From Wave 1 to Wave 2, there has been progress in
estimated time taken for compliance
However, a very small percentage of airlines are confident
on getting compliant by September 2011
ä
ä
ä
19%
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Estimated time and budget
Estimated Time
Industry Research I Simplified Interline Settlement : Airline Preparedness Survey - Wave 2
Airlines have to follow stipulated methods for settling their
dues, if some airlines have not upgraded their operating
system, it will result into dilemma, Wherein SIS compliant
airline will be using Integrated Settlement (IS) unit and Non
SIS compliant airlines have to go via traditional way which
will intensely affect the settlement process.
Majority (60%) respondents mentioned that, they are
unaware about the budget to be considered. This is primarily
because of the ambiguity on requirement and step wise
process. Almost 1/4th of them kept the budget on lower side
i.e. less than $50,000.
Only
The survey objectives are to monitor the airlines preparedness
towards IATA’s Simplified Interline Settlement (SIS) Project
which includes:
ä
ä
ä
ä
ä
ä
Airline’s priority for SIS complianceUnderstanding of changes required for SIS complianceTraining requirements and dependenciesStatus in terms of readiness for SISApproaches to SIS complianceEstimated time and budget
The survey was first launched in 2010 and comparisons are
made where appropriate with previous surveys, although the
sample may vary between years. Questionnaires were sent to
senior revenue accounting heads and other high-level
executives during (1st Quarter) January 2011.
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.
A total of 82 responses from 66 airlines
received, providing an even and
representative share of the world’s top
airlines
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Survey objectives & methodology
Industry Research I Simplified Interline Settlement : Airline Preparedness Survey - Wave 2
Simplified Interline SettlementAirline Preparedness Survey - Wave 2
The Simplified Interline Settlement (SIS) project aims to simplify interline billing, and remove paper from the entire settlement process, delivering tangible financial and process improvement benefits to the industry.
About IATA’s Simplified Interline Settlement (SIS)
IATA states the vision for SIS project as follows:
ä? Invoices are electronic and not backed by paper
ä? Prime passenger billings do not require paper invoices or
coupon listings
ä? IDEC formats are maintained with increased record types
ä? Passenger rejects, including any attachments, are submitted
electronically without paper
ä? Cargo and Mail billings are electronic and paperless
ä? Miscellaneous billings (including any supporting information)
are electronic, whether as data or with attachments
ä Settlement action directly from Electronic Ticketing (ET)
systems is enabled - Auto-billing
Source: IATA Presentation
The Integrated Settlement solution will encompass Passenger, Cargo, Miscellaneous and UATP interline billings and ICH, ACH as well as bilateral settlements.
Industry Research I Simplified Interline Settlement : Airline Preparedness Survey - Wave 2
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