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Airline Revenue Accounting - Whitepaper

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The demands of the global airline industry is steadily rising. As a result, pressures to record, monitor, analyze and collect revenues are also expected to increase. Thus, it is has become imperative …

The demands of the global airline industry is steadily rising. As a result, pressures to record, monitor, analyze and collect revenues are also expected to increase. Thus, it is has become imperative for airlines to streamline revenue accounting functions to make effective decisions. Our approach helps you address these needs by selecting the right revenue accounting system to protect against revenue leakages.

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  • 1. www.niit-tech.com Airline Passenger Revenue Accounting NIIT Technologies White Paper
  • 2. CONTENTS Introduction 3 Airline Operations 3 Revenue Accounting Function 3 Selecting the Right Revenue Accounting System 6 Conclusion 6
  • 3. TRANSPORTATION TRAVEL CARGO PACKAGING TRANSPORTATION TOUR TRAVEL GUIDE TRAVEL TRANSPORTATION CARGO CARGO LOGISTICS TRAVEL JOURNEY GUIDE TRANSPORTATION CARGO JOURNEY CARGO GUIDE LOGISTICS TRAVEL Introduction that accumulates on their desks. This has been possible due to Airline business, which was a monopolistic and profitable business till mid 90’s, is now one of the most complicated, competitive and vulnerable businesses in the world. Rising fuel prices, major government pressures on tougher security measures and a tough global economy have cut profits and the advancement in the Revenue Accounting and related systems; where departments of an airline are benefitted with the information available on a real-time basis. Today, Revenue Accounting systems have become so dynamic that they not only provide relevant information on a real-time basis but also provide minute details required to check the performance of a airlines are working hard to operate within parameters of costs single route, on a single day. This information facilitates the and budgets. Adding to the pain, low cost airlines have entered decision the fray with variable and flexible operating models. Legacy Reservation Booking Designators (RBD), Schedule, Type of airlines will have to engage in innovative efficiency measures to Aircrafts used on a particular route etc. as compared to how it stay in the air and in the black. To survive and to attain long term was handled in the past. profitability all carriers will have to restructure and refocus. One key tool for this radical overhaul is to outsource most of their noncore processes. This will result in major cost cutting and allow makers to make adjustments in their Fares, In a nut-shell, there was no dearth of information for an airline. However the tools that are available today are far too advanced to facilitate timely availability of actionable intelligence. them to leverage their scale and systems. This paper lists the revenue accounting providers, the features of Revenue Accounting Function the solution they provide and ways of selecting the right revenue The Revenue Accounting function has changed manifolds as accounting system. compared to what it was decades ago. With a lot of initiatives from IATA and group airlines, the focus has been to make the overall process electronic. While projects like eTicketing, Simplified Airline Operations Interline Settlement (SIS) etc. has changed the job of a Revenue With changes in the overall airline industry, almost all functions in an airline have revamped lately. Some of the areas which were treated as back-office tasks have gained huge importance in the day-to-day working of an airline. Revenue Accounting is one such function that has gained tremendous importance in the way Commercial/Sales department of an airline takes decisions. The decisions of the airlines are fuelled primarily by the latest Accountant from real accounting to monitoring the activities/behavior of the system in use, the demand of the fast-evolving global travel market has made the business of airline revenue accounting even more complex. There is tremendous pressure to record, monitor, analyze and collect all types of revenues as soon as possible. Thus, it becomes imperative for enhancements that have taken place in this area of business. The airlines’ to streamline revenue accounting functions and develop a Revenue Accounting systems today have become highly robust by highly effective solution. accounting the worldwide sales of an airline and by delivering data-analytics with the help of new Analytical tools, developed/adopted by the system providers. As a reaction to these new initiatives and in order to keep pace with the changes in the industry, Revenue Accounting system providers have come far compared to the vision they were initially There was a time when this information was not readily available built on. However the thought process of adopting these changes to the decision makers, but now they risk being flooded with data has been different for different providers. While some of them 3
  • 4. continue to modify their existing codes, others have taken a stand of succeeding in the market for such vendors is much higher as to build next-gen Revenue Accounting systems that not only compared to the new entrants, since Revenue Accounting is a performs accounting but also provides in-built analytical tools heavily domain led function of an airline. along with several other value-adds. Some of the vendors have already started understanding the value of an integrated solution Revenue Accounting System Providers and have embarked on projects that leverage new technologies to Below is a snapshot of all the major Revenue Accounting system shift their old platforms and make them more robust. Possibilities providers along with their market share and synopsis: Vendor Product Country/Backing Airlines served % Market In House IT Department NA NA 42 21.21% Mercator RAPID/RADAR Dubai/Emirates 35 17.68% NIIT MonaLisa Germany/Independent 26 13.13% SITA SITA PRA Global/Airlines owned organization 23 11.62% Ceicom Aracs Fx Spain/Independent 19 9.60% Lufthansa Systems SIRAX Germany/Lufthansa 13 6.57% Accelya Kale REVERA India/Spain/IATA 13 6.57% Sabre SabreAirVision PRA Global/Independent 12 6.06% Navitaire SkyLedger Global/Independent 5 2.53% Rene Perez Associates eRev US/Independent 4 2.02% Unknown NA NA 4 2.02% In House Mainframe NA NA 1 0.51% Maureva EDGAR Mauritius 1 0.51% 198 Traditionally, the market for Revenue Accounting system providers The latest addition of Integrated Reporting and Data Analytics has been segregated based on their geographical locations. While within the Revenue Accounting system has gained lot of some airlines in Asia Pacific, stick to their in-house solutions, importance. A lot of emphasis has also been given on making the others have migrated to Revera by Kale Consultants. Most of the Revenue Accounting systems real-time and reducing the time gap airlines in Middle East use RAPID from Mercator and MonaLisa between sales and recording of any transaction that helps airlines from NIIT Technologies in Europe, while Sabre/SITA enjoys a bigger in making real-time, informed decisions. Revenue Accounting data customer base in the North and South American market. However are keys for making decisions but normally transmitted in a raw this trend has started changing lately, primarily after the 100% format to some other systems. However, with the evolution of e-Ticketing initiative launched by IATA, which has changed the next-gen Revenue Accounting systems, this data can now be overall picture of how Revenue Accounting processes are easily presented, transmitted and reproduced at any stage with managed in an airline. very less effort. The new Business Intelligence tools helps airlines in creating their own reports without any help/assistance, helps users Post e-Ticketing, IATA has launched several new initiatives that have given these providers possibilities to prove their strengths. In to dig deep into data without getting lost, measure the necessary KPI’s for decision making and helps in forecasting. the bargain some of the niche providers like Kale, Mercator has tremendously gained the market share whereas big Airline system players like SITA and Sabre has not been very aggressive in this area of business. 4
  • 5. Amadeus Passenger Revenue Accounting System Data Reporting and Analytics The latest addition to the list of vendors for Revenue Accounting Reporting facilities, first-class Drill-Down, Slice-and-Dice and Revenue Accounting incorporates unrivalled, advanced Online systems is Amadeus, leader in the Airline Systems market with comparative Capabilities with the objective of maximizing revenue. more than 200 airlines using Altea Reservation system. Amadeus Airlines typically manage data reporting and analytics with revenue has signed two of the biggest airlines - British Airways and Saudi management solutions. Many of these solutions integrate with the Arabian Airlines as their launch customers. core Revenue Accounting systems while some, mostly the newer ones, are in-built solutions easier to use as well as maintain. Amadeus Passenger Revenue Accounting is a robust, new generation passenger revenue accounting system based on Some of the key features offered by these solutions are: advanced and intuitive technology. It is specifically designed to • Automated the procedure of extracting data from revenue meet the needs of an airline for a high-productivity, real-time application that also provides full integration with respective passenger service system. accounting systems and other sources • Fully supported decision-making by commercial, marketing and finance departments within airlines through powerful and accurate data analysis It enables an airline to stay in control of the automatic recording, • Expanded system's analysis scope, and ensured loading of management and reporting of real-time information related to all non-revenue accounting data such as budgetary figures and planned, unearned and earned revenues. It allows efficient commercial targets handling of any accountable document received through any distribution channel. Amadeus Passenger Revenue Accounting represents an innovative progression in the business activity that transforms the airline accounting task into a strategic function. Other than the standard industry modules such as Sales registration, Usage registration, Interline billing, Proration, Financial Accounting and Sales/Revenue Reporting, it also offers modules like Card capture and settlement, Sales auditing and Agency incentive manager. For Airlines having full Altéa suite Amadeus Passenger Revenue Accounting System is fully integrated with other leading Amadeus solutions such as • Key statistics are automatically generated. Examples include: - Flown revenue - Sales • Key performance indicators such as load factor, RTK and RPK - By period e.g. day/month/quarter/YTD/user-defined period - By flight number - By sector, route, origin and destination - By market - By point of sale/agent wise - By product • Made it extremely easy for business users to perform the Electronic Ticketing Server, Electronic Miscellaneous Document analysis needed to help them in their jobs, with the system using Server, Altéa Inventory, and Altéa Departure Control. All sales are software features recorded, reported and analyzed automatically, in real time. • Online canned reports Airlines also benefit from instant identification of earned revenue • Provided the ability to create user-specific flexible/graphical reports through the online capture of flown information. • Provided dashboard facility for a quick and easy to use summary view 5
  • 6. • Extensive drill down/drill up query facilities • Comprehensive security features control the dissemination of information on a need-to-know basis • Audit features track information usage • The system helps in proactively monitoring performance against targets While making a choice out of so many options available in the market, an airline must focus on the following items: • Vendor background/experience • Reference customers • Product features • Integration with other third party systems • Adaptation of the latest industry enhancements • Knowledge can be shared through single data delivery facility • Technology in use • Provided data warehousing technologies • Analytical capability of the solution Conclusion Selecting the Right Revenue Accounting System In recent times, most of the airlines are plagued with huge fixed Airlines around the world have to operate on tight schedules and costs and bankruptcies. Hence it is imperative for the airlines to accuracy for detail, where every activity is crucial and critical to run take decisions with regards to CAPEX/OPEX and high level of the business successfully. As they are heavily technology driven agility to overcome these obstacles. they need to ensure that they are using the right vendor and the right system to achieve predefined targets. It is imperative for To summarize, Revenue Accounting systems add significant value airlines to choose the right partner. to airline’s day-to-day decision making. With highly advanced tools available in the market, airlines should go for a long term solution Airline business is dependent on partnerships in different that not only meets its current requirements but also the challenges operational functions. Lately most of the airlines have been that the industry might face in the future. The chosen system must maintaining a vendor pool for finding the right partner and like any be capable of reducing possible revenue leakage possibilities, other industry gets inquiries, calls, and proposals from several presenting timely and accurate reports to the higher management vendors in various areas of operations on a daily basis. With so and bringing process improvements in the overall Revenue many options available it is difficult for the airlines to make right Accounting function of an airline. decisions. Industry governed systems such as Revenue Accounting also gets highly customized to the airline’s need over a The success of such an engagement depends on the experience period of time. It becomes difficult as well as risky for the airlines to and commitment of the technology partner that can lead to a long make an easy change of system. PRA operations remain a term partnership between the two organizations. Hence it is critical non-core process for an airline but the information coming out is for an airline to perform a thorough due diligence before finalizing critical for the functioning of the system. the partner with relevant experience, resources, scalability, well established processes and data security. 4
  • 7. About NIIT Technologies NIIT Technologies is a leading IT solutions organization, servicing customers in North America, Europe, Asia and Australia. It offers services in Application Development and Maintenance, Enterprise Solutions including Managed Services and Business Process Outsourcing to organisations in the Financial Services, Travel & Transportation, Manufacturing/Distribution, and Government sectors. With employees over 7,000 professionals, NIIT Technologies follows global standards of software development processes. Over the years the Company has forged extremely rewarding relationships with global majors, a testimony to mutual commitment and its ability to retain marquee clients, drawing repeat business from them. NIIT Technologies has been able to scale its interactions with marquee clients in the BFSI sector, the Travel Transport & Logistics and Manufacturing & Distribution, into extremely meaningful, multi-year "collaborations. NIIT Technologies follows global standards of development, which include ISO 9001:2000 Certification, assessment at Level 5 for SEI-CMMi version 1.2 and ISO 27001 information security management certification. Its data centre operations are assessed at the international ISO 20000IT management standards. India NIIT Technologies Ltd. Corporate Heights (Tapasya) Plot No. 5, EFGH, Sector 126 Noida-Greater Noida Expressway Noida – 201301, U.P., India Ph: + 91 120 7119100 Fax: + 91 120 7119150 Americas NIIT Technologies Inc., 1050 Crown Pointe Parkway 5th Floor, Atlanta, GA 30338, USA Ph: +1 770 551 9494 Toll Free: +1 888 454 NIIT Fax: +1 770 551 9229 Europe NIIT Technologies Limited 2nd Floor, 47 Mark Lane London - EC3R 7QQ, U.K. Ph: +44 20 70020700 Fax: +44 20 70020701 Singapore NIIT Technologies Pte. Limited 31 Kaki Bukit Road 3 #05-13 Techlink Singapore 417818 Ph: +65 68488300 Fax: +65 68488322 Write to us at marketing@niit-tech.com www.niit-tech.com D_39_260713 A leading IT solutions organization | 21 locations and 16 countries | 8000 professionals | Level 5 of SEI-CMMi, ver1.2 ISO 27001 certified | Level 5 of People CMM Framework