Simplified Interline Settlement RA44 – SIS Overview Nicholas Coote Director Industry Clearing Services

Simplified Interline SettlementRA44 – SIS Overview

Nicholas CooteDirector Industry Clearing Services

September 2010 SIS P3 – Materials – RA44 Plenary 2

SIS Vision

Invoices are electronic and not backed by paper Prime passenger billings do not require paper invoices or coupon listings 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 IDEC concept is 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.


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


SIS Phases - OverviewPhase 1

FeasibilityPhase 2

RequirementsPhase 3a

RFP

Phase 1 – July 2007 to September 2007: This concept was found to be feasible after changes to ICH and AIA processes, with further evaluation

and prioritization required

Phase 2 – January 2008 to September 2008: Requirements gathering & RFI

Phase 3a – November 2008 to Feb 2009: RFP & Vendor Selection Internal Business Case: Project & recurring costs, costs to the industry

Phase 3b – March 2009 to December 2009: Airline Business Case, Vendor contracting, Analysis, Requirement Finalizations IATA Stage Gate Review

Phase 3c – January 2010 to August 2011: Development, Test and Acceptance, Pilot Test

Move to Operation – September 2011

Phase 3bAnalysis

Phase 3cDev/Test/Pilot


Timeline Phase 3Apr 2013

SIS P3a/b – RFP & Specification

SIS P3c - Development & Pilot

Requirements review

Development & System test

UAT – Acceptance Tests

Pilot run

Operations & Roll-out

Member Profile set-up by carriers

Sandbox testing

IDEC parallel test & cut-over

Move to Operation

SIS Go-live

Pilot live

All carriers migrating

Potential mandated Pax/CGO prime

Old IDEC cut-off date

Potential mandated date overall

ICH Web cut-off date

Nov 11 -

Sep 2012

October 2011

Sep 2011May 11 – Aug 11

Mar 11–

Apr 11

May 10 –

Feb 11

Jan 10 -Apr 10

Nov 08 – Dec 09

High-level Project Plan

IATAAirlines

Steering Group

Vendor


Project Update Project Status

Pilot Kick Off completed - 5th and 6th of May, YMQ Interface Kick-Off - 21st and 22nd of June, YMQ All ISD’s with 3rd parties signed off Key milestones agreed Screen Prototype review with airlines and others

Upcoming Activities User interface optimisation Test Strategy finalization Acceptance testing Pilot testing


Objectives of the Pilot test Improve industry confidence in solution Testing of the application in the final production infrastructure Understand challenges of the migration with limited deployment Benefit from end users feedback on key migration tools (CBT, User Guide,

Sandbox file testing, Training)

But it is not : A formal sign-off on the application acceptance from industry – IATA does it Full coverage test – Acceptance Test done by IATA prior Pilot testing


Pilot ParticipantsPilot Name Pax Cargo MiscAdria JP MonaLisa Champ in-houseAir Austral UU Edgar Edgar EdgarAir China CA IPRA Cargo Spot GHCS

Alitalia AZ SiraxAir India AI REVERA MBSAmerican AA in-house SAPBritish Airways BA in-house Rapid in-house

China Airlines CI in-house in-house

TBD – ACH menber

TBD ? ?

IATA XB SAP

Emirates EK Rapid Rapid

Lufthansa LH Sirax SAP

SITA XS Kenan


Steering & Working GroupsAirline participation has been essential to the progress that SIS has made: Steering Group Passenger WG Cargo WG Miscellaneous WG

Over 60 participants from over 30 carriers, from ICH and ACH

ICH Operations WG


Note on Miscellaneous 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

A ticket is a ticket, and an AWB an AWB, but a catering invoice has almost nothing in common with an engineering invoice or a GDS billing

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

Over 80 business types have been identified and encoded in the design RAM A13 has been rewritten, and has gone from 5 pages to over 60 pages,

without the IS-XML breakdown Full details and breakouts will be provided at the ICH User Group in

KUL 20-22 October


Why it is important to be in KUL 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 ICH UG is where the e-invoicing, legal and financial management aspects will

be discussed The concept of Charge Category and Charge Code will be explained more

fully (remember: more than 80, each with their own mandatory field contents) The changes to UATP processing will be covered there


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 carriers put far more than ten thousand

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


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 Fee 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


SIS Fee Timing 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

Fees with blue background are only applicable to ICH members (not payable by ACH-only carriers)

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


Governance Two new permanent bodies to be proposed to the Financial

Committee, with new Terms of Reference SIS SC to be responsible for the oversight of the service, the funding,

and the prioritisation of changes and enhancements Made up as now of directly appointed representatives of the key

industry bodies (RAWG, ICHP, E-invoicing, ACH RAC, ACH, ICH), together with 5 members from IATA airlines proposed by the industry and approved by the DG

E-invoicing Standards WG to be responsible for management and development of the IS-IDEC and IS-XML standards, consistency between the two, and integration of other standards if needed

Made up of 10 airline and 2 non-airline users of the IS service


IS Participation Agreement An industry standard agreement, with the same terms applicable to all Will be published in the RAM, like IDEC, Sampling and First & Final Will be in the B section as not currently a mandate Will be published once review completed by the SIS SG Needs to be signed in order to access the IS platform

Update your airline profile information - key contacts Notify us of any corrections to controlled data Set up your users No charges apply until SIS go-live in September


What this means for you

Assuming you have at least one partner that is an early adopter…

Go-live is P1 of September 2011 You will begin to receive billings through IS, but you still receive the paper…

Expected IS mandate is April 2013

2011Sept

Go-live

2013Apr

Mandate

~19 months


Sept 2011 – 2nd and 3rd RMs via SIS

You received an RM via IS and wish to reject (or initiate/continue correspondence)

As per Revenue Accounting Manual rules, you must continue all rejections and correspondence via IS

Some of your partners are likely to migrate rejections and correspondence as quickly as possible

If you haven’t migrated these types yet, you’ll need to log into IS-WEB and create the billing online

2011Sept

Go-live,RMs

2013Apr


Dec 2011 – No longer receive all paper

Your partner migrated some billing types (e.g. Pax primes) to IS 3 months ago

A billing carrier can stop sending paper copies of invoices they’ve been sending through IS for at least 3 months If you haven’t migrated these types yet, you’ll need to log into IS-WEB and

download the billing data (invoices, coupon listings, supporting documents, etc) Otherwise, you will see only the claim in the ICH F3 – no invoice as you know

it today

2011Sept

Go-live,RMs

2013AprDec

No MorePaper

3 months


Sept

IDEC discontinued

Sept 2012 – IDEC service discontinued2011Sept

Go-live,RMs

2013AprDec

No MorePaper

3 months 9 months

The “old” IDEC service is discontinued

You will no longer be able to send any billings using the old IDEC format and your partners will not be able to bill you using the old IDEC format. This applies to primes and whatever other billings are sent via IDEC. All data on old IDEC must be sent via IS; expect that you will receive all prime

billings via IS – a lot of effort if you’re still manual


Sept

IDEC discontinued

Apr 2013 – No direct ICH/ACH claims2011Sept

Go-live,RMs

2013Apr

Mandate

Dec

No MorePaper

3 months 9 months 7 months

Usage of Integrated Settlement is mandated

ICH WEB and ACH recap sheet service will be disconnected for claims submission All claims must be submitted via IS and must include all relevant billing info All your partners will be fully migrated by now – every incoming billing will be via

IS

* The mandate date is an estimate; the exact date will depend on acceptance of the solution, sufficient volumes, and approval by the responsible committees.


An operation needs staff… SIS Operations Manager

Significant management experience of interline billing Understanding of all Clearing House processes Ability to lead change in the industry

SIS Operations staff Experienced in at least one business stream (P, C, U, M) Support acceptance and pilot testing of IS application Provide set-up and customer support to migrating and migrated airlines Could also be done as a secondment for 1-2 years

If you are interested, or know someone who is, CV/biodata to [email protected]


Final word Integrated Settlement is on its way In one year it will be live It will affect everyone here Make sure your teams are aware of the changes to billing rules and

processes Make sure your Finance department is on board Make sure your departmental champions are assigned Make sure you are signed up, profile data is correct, and your staff

have log-on IDs and training before IS goes live Look forward to a paperless world!

September 2010 SIS P3 – Materials – RA44 Plenary 25 September 200825

Thank you.

Email:

[email protected]

SIS Website:

www.iata.org/sis

mailto:[email protected]

Documents

Simplified Interline Settlement RA44 – SIS Overview Nicholas Coote Director Industry Clearing Services