Industry ResearchSimplified Interline SettlementAirline Preparedness Survey – Wave 2
ContentsExecutive summary ............................................................................ 3Participants detai...
Executive SummarySIS Airline Preparedness Survey - Wave 2The deadline for International Air Transport Associations (IATA) ...
Participants DetailThe SIS Preparedness Survey - Wave 2 saw active participation from airlines across the globe. A total o...
Airline’s priority for SIS compliance               91%                                                                   ...
Understanding of changes required for SIS Compliance               50%                                                    ...
Training requirements and Dependencies              64%                                                                 Ai...
Status In term of readiness for SIS               50%                                                                  At ...
Approaches to SIS Compliant            53%                                                                   In rapid chan...
Estimated time and budget              19%                                                                 IATA has set a ...
Survey objectives & methodologyThe survey objectives are to monitor the airlines preparednesstowards IATA’s Simplified Int...
About IATA’s Simplified Interline Settlement (SIS)The Simplified Interline Settlement (SIS) project                 The In...
CORPORATE HEAD OFFICE                                                                                         INDIA       ...
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Survey report simplified interline settlement (sis) - airline preparedness survey wave 2

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Survey report simplified interline settlement (sis) - airline preparedness survey wave 2

  1. 1. Industry ResearchSimplified Interline SettlementAirline Preparedness Survey – Wave 2
  2. 2. ContentsExecutive summary ............................................................................ 3Participants detail ............................................................................. 4Airline’s priority for SIS compliance .................................................. 5Understanding of changes required for SIS Compliance .................... 6Training requirements and dependencies .......................................... 7Status in terms of readiness for SIS .................................................. 8Approaches to SIS compliance .......................................................... 9Estimated time and budget ............................................................... 10Survey objectives & methodology ..................................................... 11About IATA’s Simplified Interline Settlement (SIS) ............................ 12 2 Industry Research I Simplified Interline Settlement : Airline Preparedness Survey - Wave 2
  3. 3. Executive SummarySIS Airline Preparedness Survey - Wave 2The deadline for International Air Transport Associations (IATA) Key findings from Wave 2:Simplified Interline Settlement (SIS) project is fast approaching.Come September 2011, airlines globally will move to the 91% consider SIS compliance as high to very ärevolutionary new platform that aims to streamline the interline high prioritysettlement process. Starting with the passenger revenueaccounting and miscellaneous (non-transport) billing processes, ä % respondents are still not clear Over 50SIS will also encompass the cargo and UATP processes. about the required system changes to become SIS compliantThe SIS Airline Preparedness Survey is a Kale initiative to assistthe airline industry in its transition. Carrying forward from its ä respondents expressed training need to 64 %learning in the first edition, Wave 2, is built on insights gathered understand changes required for SISfrom airline revenue accounting professionals to identify the complianceairline industrys readiness for SIS. The Airline PreparednessSurvey - Wave 2 saw a record participation of 82 respondents ä % of airlines are beyond Initiation Over 50from 66 airlines across the globe. and budget finalization stage of SIS readinessThe survey shows that majority (82%) of the airlines haveinitiated and finalized their course of action and budgets for ä respondents shown dependency on RA 53 %becoming SIS compliant. However, there is still a clear lack of vendor for implementing technology changeunderstanding towards the changes required in Miscellaneousbilling and Cargo areas. Without proper training and ä % respondents expect their system Only 19assistance for the implementing the required changes, the to be SIS compliant before Sep 2011industry is currently behind schedule in their SIS complianceinitiatives.During the survey and related interactions with the industry wehave found that airlines globally are approaching SIScompliance in various ways. From developing in-housesolutions, dependence on vendors for changes, to outsourcingtheir interline requirements – the options available aremultifold. But it is more important to realize that SIS is an idealopportunity for airlines to relook at their systems and undertakesignificant business process re-engineering in order to derivethe maximum benefits of this industry change.The breadth and depth of these survey findings help paint a bigpicture view of the IATAs SIS project, more than just a quicksnapshot, the information shared by participants has enabled usto provide fresh insights to all those associated with the airlineindustry today.Kale Consultants Limited would like to thank all those whoparticipated in our survey. SIS Preparedness Survey - SIS Preparedness Survey - SIS Preparedness Survey - Wave 1 Wave 2 Wave 3 JUNE 2010 JANUARY 2011 JULY 2011 (proposed) 3 Industry Research I Simplified Interline Settlement : Airline Preparedness Survey - Wave 2
  4. 4. Participants DetailThe SIS Preparedness Survey - Wave 2 saw active participation from airlines across the globe. A total of 66 airlines rangingfrom network carrier to low cost carrier participated in the survey. The online survey was conducted between January andFebruary 2011. The survey data analysis was done in March 2011. No. of Airlines from each region Respondents Profile South Middle East America, 7 + Africa, 8 North America, 9 Asia, 22 Europe, 20 Participation : Wave 1 vs. Wave 2 Wave 1 Wave 2 Airline 56 66 Individuals 71 82............................................................................................................. Size Annual PAX Count Tier 1 Above 15 Million Tier 2 Between 3 - 15 Million Tier 3 Below 3 Million 4 Industry Research I Simplified Interline Settlement : Airline Preparedness Survey - Wave 2
  5. 5. Airline’s priority for SIS compliance 91% The Simplified Interline Settlement (SIS) project aims to standardize, facilitate and expedite interlines billing and settlement in the airline industry. IATAs 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 consider SIS implementation timelines. There are significant regional compliance as high differences, 88 % of the respondents from airlines in Middle East and Africa region consider SIS as very high priority, to 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. Priority : Priority: Wave 1 vs. Wave 2 Regional differences Low priority High priority Very high priority* Base: Those respondents answering - unweighted 5 Industry Research I Simplified Interline Settlement : Airline Preparedness Survey - Wave 2
  6. 6. Understanding of changes required for SIS Compliance 50% 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 Over House) or ACH (ATA Airline Clearing House). Most airlines are aware about changes required in passenger revenue accounting. However, awareness is limited for changes Respondents are still required in miscellaneous billing system to be SIS compliant. not clear about the Over ä 43 % of respondents understand the changes required system required in passenger revenue accounting changes to become Only ä 17% respondents are aware what changes are required in miscellaneous billing system to be SIS SIS compliant compliant Significant ä changes observed among airlines in understanding the system change for passenger revenue accounting; however this understanding is missing towards Miscellaneous & Cargo. Understanding System Changes Wave 1 vs. Wave 2* Base: Those respondents answering - unweighted 6 Industry Research I Simplified Interline Settlement : Airline Preparedness Survey - Wave 2
  7. 7. Training requirements and Dependencies 64% 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. respondents Only 5 % of the respondents understand SIS related system expressed the need changes, whereas other are not sure or to some extent require for training to training to understand changes in their present system to be SIS compliant. understand changes required for SIS compliance Dependance for Training/ Hand-holdingAirline respondents who have vendorprovided RA system depend on vendor forhand holding/training needs. Irrespective ofthe approach taken by the airline to becomeSIS compliant training need observed across IATA Both RA Vendorairline. There are very few airlines have optedto purchase off the shelf module or replace the 36% 26% 38%current RA system * Base: Those respondents answering - unweighted 7 Industry Research I Simplified Interline Settlement : Airline Preparedness Survey - Wave 2
  8. 8. Status In term of readiness for SIS 50% At present, Airlines across the globe do not have infrastructure (System) to support the industry change. Over 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. of airlines are beyond Initiation Significant regional changes observed are: and budget Europe ä and Middle East and Africa region based airlines are ahead of others in readiness finalization stage of SIS readiness Majority ä of airlines in South America & Asia are lagging behind in term of readiness Keeping ä the go-live date stated by IATA, airlines are found to be at nascent stage of their preparation level. Readiness Status* Base: Those respondents answering - unweighted 8 Industry Research I Simplified Interline Settlement : Airline Preparedness Survey - Wave 2
  9. 9. Approaches to SIS Compliant 53% 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. respondents shown Significant regional changes observed are: dependency on RA vendor for Majority ä (44%) respondents from North American airlines take lead in developing in-house solution to become SIS implementing compliant technology change Airlines ä from Middle East and Africa region completely depend on RA system vendor to provide solution. ä respondents Few from South America region plan to outsource their interline billing to a 3rd party vendor European ä airline look forward to replace their current RA system with SIS compliant RA system Approach to become SIS Compliant * Base: Those respondents answering - unweighted 9 Industry Research I Simplified Interline Settlement : Airline Preparedness Survey - Wave 2
  10. 10. Estimated time and budget 19% 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 Only implementation of IATAs SIS project holds the key toward future success of this ambitious mission. respondents expect ä3 Only % of the airline respondents expect their system to their system to be be SIS compliant within 3 month. SIS compliant before ä Wave From 1 to Wave 2, there has been progress in estimated time taken for compliance Sep 2011 However, ä a very small percentage of airlines are confident on getting compliant by September 2011Airlines have to follow stipulated methods for settling theirdues, if some airlines have not upgraded their operatingsystem, it will result into dilemma, Wherein SIS compliantairline will be using Integrated Settlement (IS) unit and NonSIS compliant airlines have to go via traditional way whichwill intensely affect the settlement process.Majority (60%) respondents mentioned that, they areunaware about the budget to be considered. This is primarily Estimated Timebecause of the ambiguity on requirement and step wiseprocess. Almost 1/4th of them kept the budget on lower sidei.e. less than $50,000. 10 Industry Research I Simplified Interline Settlement : Airline Preparedness Survey - Wave 2
  11. 11. Survey objectives & methodologyThe survey objectives are to monitor the airlines preparednesstowards IATA’s Simplified Interline Settlement (SIS) Projectwhich includes:ä priority for SIS complianceAirline’sUnderstanding of changes required for SIS complianceää requirements and dependenciesTrainingä in terms of readiness for SISStatusApproaches to SIS complianceäEstimated time and budgetä A total of 82 responses from 66 airlinesThe survey was first launched in 2010 and comparisons are received, providing an even andmade where appropriate with previous surveys, although the representative share of the world’s topsample may vary between years. Questionnaires were sent tosenior revenue accounting heads and other high-level airlinesexecutives during (1st Quarter) January 2011.Most of the questions used simple check box, multiple choice,or ranking format, but there were several open endedquestions as well. The extensive nature of the question setwas intended to maximize depth of information rather thanbreadth of responses. Simplified Interline Settlement Airline Preparedness Survey - Wave 2 11 Industry Research I Simplified Interline Settlement : Airline Preparedness Survey - Wave 2
  12. 12. About IATA’s Simplified Interline Settlement (SIS)The Simplified Interline Settlement (SIS) project The Integrated Settlement solution will encompassaims to simplify interline billing, and remove paper Passenger, Cargo, Miscellaneous and UATP interlinefrom the entire settlement process, delivering billings and ICH, ACH as well as bilateraltangible financial and process improvement benefits settlements.to the industry. IATA states the vision for SIS project as follows: ä are electronic and not backed by paper ? Invoices äpassenger billings do not require paper invoices or ? Prime coupon listings ? IDEC formats are maintained with increased record types ä ? Passenger rejects, including any attachments, are submitted ä electronically without paper äand Mail billings are electronic and paperless ? Cargo ? Miscellaneous billings (including any supporting information) ä are electronic, whether as data or with attachments Settlement action directly from Electronic Ticketing (ET) ä systems is enabled - Auto-billing Source: IATA Presentation 12 Industry Research I Simplified Interline Settlement : Airline Preparedness Survey - Wave 2
  13. 13. CORPORATE HEAD OFFICE INDIA 3rd Floor, Modi House, Naupada, Eastern Express Highway, Thane (W) - 400 602. Tel : +91-22-6780-8888 Fax : +91-22-6780-8899 Email: airlines@kaleconsultants.com GLOBAL OFFICES USA 33, 150 Morris Ave. Suite 203 Springfield, NJ 07081 Tel : +1-973-376-8002 Fax : +1-973-376-8006 UK 100A High Street Hampton TW12 2ST United Kingdom Tel : +44-20-8783-2392 Fax : +44-20-8783-2391 Other Offices and Delivery Centres USA: Chicago - IL, Brasstown - NC India: Mumbai, Pune, Goa New Zealand: Christchurch©2011 Kale Consultants Limited. All rights reserved. The ‘Kale’ logo and product and services mentioned herein are either registered trademark ortrademarks pending registration of Kale Consultants Limited, or its affiliated entities.No part of this document may be reproduced in any form or by any means without the prior written permission of Kale Consultants Marketing Team. Mar 2011

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