Simplified Interline Settlement A fundamental change…

Nicholas CooteProject Sponsor

KUL – 20-22 Oct 20102010 ICH UG Meeting 2

SIS is the project…. Board of Governors,

IATA Top management

IATA people and money

IATA StB mobilisation

Workshops at IATA regional offices

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Why SIS is important?

Hitting the core of the process: paper

Changing the way industry works

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Any organization, not only airlines

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Not just an IT project Business re-engineering

Re-think global processes

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Spread the message in your organization

Service providers

Invoice creators

Finance team

Treasury

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Big, industry wide, global IATA: $millions, 4 years, 20 people

400 Airlines

80 industry suppliers

+5,000 people

$ +700 m SAVINGS

KUL – 20-22 Oct 20102010 ICH UG Meeting 8

SIS Vision

Invoices are electronic and not backed by paper Prime passenger billings do not require paper invoices or coupon

listings 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 IDEC concept maintained as IS-IDEC but with extended record

lengths and new types Settlement action directly from ET systems is enabled – Auto-billing

Fundamentally change, simplify and integrate the interline settlement process, delivering tangible financial benefits to the

industry.

KUL – 20-22 Oct 20102010 ICH UG Meeting 10

Think about your IS Implementation You’ll save money by

replacing today’s processes with IS

But the greatest potential of IS comes from completely rethinking your processes (especially in Misc)

Going forward, you should think about IS holistically

KUL – 20-22 Oct 20102010 ICH UG Meeting 11

Important aspects to think about There is substantial business re-engineering to be done at the

outset, as invoicing is often originated from many sources Person in charge of invoice not usually from the business end,

unlike Revenue Accounting. This is an extra challenge The structure of invoices needs to be changed in order to

invoice electronically and enable compliance with IS-XML standards

Legal and financial management aspects of e-invoicing The concept of Charge Category and Charge Code

Remember: more than 80, each with their own mandatory field contents

There are major changes to UATP processing

KUL – 20-22 Oct 20102010 ICH UG Meeting 12

Miscellaneous billings Misc billing is subject to the biggest changes of all

No data standards currently in use – no IDEC equivalent Huge variations in invoices compared to passenger and cargo Over 80 business types have been identified and encoded in the

design

IS-XML serves the same purpose as IS-IDEC, but designed to work in conjunction with financial systems

Revenue Accounting Manual chapter A13 has been rewritten, and has gone from 5 pages to nearly 100 pages

KUL – 20-22 Oct 20102010 ICH UG Meeting 13

Principles of the Charging Model Cover costs – SIS will be run as a revenue-neutral

service – which means no profits but also no losses Fair and transparent to the end users – possible for IS

users to calculate costs in advance; no surprises Flattening cost curve – The largest members put far

more than ten thousand times the number of invoices through SIS than the smallest; their SIS fees cannot be proportional

KUL – 20-22 Oct 20102010 ICH UG Meeting 14

SIS Fee ComponentsComponent ICH Member

ICH Web Fees Same as today($1,500 annually)

ICH Web/SIS Migration SurchargeDeclines over time as Transaction Fees build up

Dependent on type of member and # of invoices processed($4,000 – $22,000 annually)

IS Annual FeeAlternative to the ICH Web/SIS Migration Surcharge

Dependent on type of member($1,000 - $4,500 annually)

Transaction Fees(Invoice, Coupon, AWB, supporting document kb, etc.)

Per transaction dependent on previous years history.Additional 25% if entered through the IS-Web

KUL – 20-22 Oct 20102010 ICH UG Meeting 15

After SIS go-live Before you sign-up

After you sign-up Before full migration

After full migration* Through eternity

ICH-WEB Fee ICH-WEB Fee

SIS Migration Surcharge SIS Migration Surcharge

Transaction Fees Transaction Fees

IS Annual Fee

SIS Fee Timing

* “Full migration” means that you no longer submit claims outside of SIS (via the ICH-WEB)

KUL – 20-22 Oct 20102010 ICH UG Meeting 16

The timer is running SIS goes live in less than a year Initial feedback is that 25-50% of members

will migrate in 2011 itself That means that members doing business

with them also have to be prepared

KUL – 20-22 Oct 20102010 ICH UG Meeting 17

Don’t forget… Your SIS billings are standardised for both ICH and

bilateral settlements Means that once migrated you can use SIS to bill any airline,

whether or not they will settle through ICH

Standardisation reduces costs and expands opportunities – look for the benefits

KUL – 20-22 Oct 20102010 ICH UG Meeting 18

Thank you.

Email:sis@iata.org

SIS Website:www. t .oria a g.s si