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World Financial Symposium 2014 World Financial Symposium 2014
Chair Opening Györgyi Szantner Head of Finance Services
British Airways
World Financial Symposium 2014 World Financial Symposium 2014
NDC – Impact on Revenue Accounting
Bryan Wilson Director, Industry Architecture, Financial & Distribution Services
(FDS), Transformation
IATA
© International Air Transport Association 2014
Overview
What is NDC?
Industry architecture changes
Focus on NDC processes
What this means for Revenue Accounting
© International Air Transport Association 2014
What is NDC?
3
NDC is a travel industry-supported program (NDC Program) launched by IATA for the development and
market adoption of a new, XML-based data transmission standard (NDC Standard).
The NDC Standard will enhance the capability of communications between airlines and travel agents and
will be open to any third party, intermediary, IT provider or non-IATA member, to implement and use.
© International Air Transport Association 2014
From Flight Distribution…
Travel agents only have access to limited airline
information that essentially
commoditizes the airline to schedule
and price
© International Air Transport Association 2014
… to Air Retailing
5
Travel agents want access to all of an airline’s product offering as available in airline web sites
© International Air Transport Association 2014
6
NDC is about giving travel agents the same capability as the airline website
© International Air Transport Association 2014
NDC - Air Retailing Tomorrow
Airline Offer
Management
System
Content Aggregators
(GDS | New
Entrants)
Travel Agents
(TMC | OTA | Independent)
Travelers only access & accept airline offers Airline systems to keep control of all data
Revenue Accountants to have good data at last!
Travelers
NDC
NDC
Airline
aggregation
NDC
© International Air Transport Association 2014
Regulatory
8
“Comparison shopping under the current system is generally limited strictly to comparing fares, and it is difficult to make price quality comparisons of different carriers’ product offerings (...)”
“The modernized communication standards and protocols and the marketing innovations that [Resolution 787] could facilitate would be pro-competitive and in the public interest”
DOT Approved Resolution 787
© International Air Transport Association 2014
NDC Technical Development November 2013
NDC Shopping schemas (v1.0) released for testing
December 2013 Live transaction | Hainan Airlines & TravelSky
1
9
September 2014 Candidate Release NDC Shopping schemas (v1.1)
Mid 2015 Updated NDC schemas New NDC complete interline capabilities
November/December 2014 Candidate Release NDC Booking, Payment & Ticketing 1st Implementation Guide
3
July 2014 Draft End-to-End schemas (v1.1) (except interline)
2
4
5
© International Air Transport Association 2014
Overview
What is NDC?
Industry architecture changes
Focus on NDC processes
What this means for Revenue Accounting
© International Air Transport Association 2014
Overview
What is NDC?
Industry architecture changes
Focus on NDC processes
What this means for Revenue Accounting
© International Air Transport Association 2014
The Full NDC Process
Own ticket stock
7 NDC Steps 0. Setup 1.Shop 2.Order 3.Pay/Ticket 4.Report sale 5.BSP Confirmation 6.Payments
Files for Credit Card Remittance
IATA BSP
$$$ $$$
Billing 5c
6a
5a
Own Sales
6b
4
3d or 5b
Airline Profile
0 Passenger
Cash credit check
Credit Card Authorization
Airline Agent Aggregator
Pay 3a
Shop 1a
Order 2
3b 3c
BSPLink Agents & Airlines
Message types: • Proprietary • NDC ex Airline • NDC ex Agent • NDC ex Aggregator
ET Server Profile
Distributor
Offer 1b
© International Air Transport Association 2014
The Full NDC Process
Own ticket stock
7 NDC Steps 0. Setup 1.Shop 2.Order 3.Pay/Ticket 4.Report sale 5.BSP Confirmation 6.Payments
Files for Credit Card Remittance
IATA BSP
$$$ $$$
Billing 5c
6a
5a
Own Sales
6b
4
3d or 5b
Airline Profile
0 Passenger
Cash credit check
Credit Card Authorization
Airline Agent Aggregator
Pay 3a
Shop 1a
Order 2
3b 3c
BSPLink Agents & Airlines
ET Server Profile
Distributor
1b Offer
© International Air Transport Association 2014
The Interline Process 10 steps for Interline NDC 0. Setup 1. Shop with ORA 2. ORA relays Complementary Shop RQ to POA 3. ORA consolidates POA RS into its Aggregator RS 4. Agent sends Order RQ to ORA 5. ORA accepts POA’s offer with Order RQ & confirms with Agent 6. Ticketing & Payments all with ORA as Validating Carrier (incl BSP reporting & settlement) 7. ORA as Validating Carrier advises ET# to POA 8. ORA as Validating Carrier manages ET/EMD coupon(s) with POA 9. POA claims flown revenue through SIS-IDEC (not NDC messages)
Offer Responsible
Airline (Validating Carrier)
Agent
Passenger
3
Participating Offer Airline
Interline Shop/Offer
IATA SIS/ICH
Airline Profile incl Interline markets
0
2
Shop 1
Order
Interline Settlement
9
Aggregator
Interline Order
8
7 5 Tkt Nr
Tkt /EMD Msgs
Ticket 6
4
BSP
Offer
© International Air Transport Association 2014
Overview
What is NDC?
Industry architecture changes
Focus on NDC processes
What this means for Revenue Accounting
© International Air Transport Association 2014
1) With NDC you keep control - Offer Airline sets the Offer Rules - Only Offers can get Ordered - Only Orders can get ticketed Much less scope for fictitious bookings held in a GDS No scope for ticketing data to be manipulated Less revenue integrity checking, Less ADMs
2) NDC simplifies interline tickets/EMD - Each interline participant states their price & product code - No need for complex ‘through fare’ filing or proration - No need to use 30 pages of industry ancillary codes - No confusion of the pax order between the players
Good News for Revenue Accounting
© International Air Transport Association 2014
1. Embrace the Offer ID? - It’s your offer or your interline partner’s proposal - Don’t check it, just ensure its used
2. Stop ticket issuance to defaulted agents? - IATA now provides ‘ticketing authority’ status files - Files sent every 2 hours as with GDSs
3. Report sales to the BSP?
- IATA offers NDCLink service to airlines reporting sales to BSPs - Just 1 file in DISH/RET format required for all BSPs
4. Use new formats for reporting RET and IS-IDEC - No more RBDs or Fare Construction data elements - Instead you will want to record NDC Offer IDs
Are you ready to…
© International Air Transport Association 2014
and a final tip
• Irregular operations - More pax will be travelling on fares which lack a fare
construction - Time to re-assess more of the default use of Y fares? - Or time to negotiate more bilateral ‘prorates’?
World Financial Symposium 2014 World Financial Symposium 2014
The Operational Opportunity
for Revenue Accounting
Györgyi Szantner Head of Finance Services
British Airways
The Operational Opportunity for Revenue Accounting
Gyorgyi Szantner Head of Finance Services, British Airways
Traditionally Revenue Accounting has been… relying on.. travel agents & other sales offices created sales reports to learn a ticket
has been sold airports to collect and send flight documentation to account for revenue perceived as late at providing sales and revenue information either delaying speedy implementation of commercial initiatives, or not evaluating and reporting sales / revenue in line with commercial
expectations reactive
2
Transformation in Revenue Accounting – Operational Opportunity 2
But now …
Supported by operational databases containing reservation, e-ticketing, flight and departure information that communicate with each other on a real time basis
5 Transformation in Revenue Accounting – Operational Opportunity 5
So what can revenue accounting take from these changes &
what can it give to the business?
6 Transformation in Revenue Accounting – Operational Opportunity 6
Meeting and Name of Presentation 7
Opportunity: Receive sales data immediately when
a ticket is sold anywhere in the world Know the revenue from a flight as
soon as the aircraft door is closed
End-to-end view of a customer’s journey
Syncronised data Common use of reference data to
sell, manage the flight and account
Benefit to business: Sales monitoring, improved forecasting
(revenue and cash), risk management, fraud control
Improved decision making effective monitoring of operational
controls tactical or strategic adjustment to flight
capacity Facilitate recovery of service failure by
customer’s first point of contact no back end reconciliation needed immediate response to market changes
- ’what you can sell, you can account for’
Tapping into this rich data available in all airlines’ operational systems will create
Meeting and Name of Presentation 8
Opportunity: NDC ticketing – airline controlled
Interline messaging at offer stage for
interline price
Benefit to business: Revenue integrity - eliminate need for
sales audit
Interline settlement based on price agreed at time of offer – improved ‘supply and demand’ management
… and the standards coming with NDC also provide
So the questions are… Do airlines value this opportunity and the potential benefits it can bring,
and, if they do,
How can the revenue accounting system providers respond to this
challenge?
9 Transformation in Revenue Accounting – Operational Opportunity 9
World Financial Symposium 2014 World Financial Symposium 2014
ERP – General Ledger Perspective
Simon Lescarcelle-Evin, Head of T&T APJ Services,
Deputy Global T&T Services Hub Head, SAP
Baljeet Nagi, ERP Sales Dev & Strategy leader – Gulf &
Saudi Cluster, Oracle
Beyond ERP Airlines Back-Office SAP Ready for Departure!
Simon Lescarcelle, VP & Global Head of Transportation & Manufacturing Services, SAP World Financial Symposium - Abu Dhabi, UAE, September 17, 2014
© 2014 SAP SE or an SAP affiliate company. All rights reserved. 2 Confidential
Airlines – Words from the Floor Piecing together the Picture
“Lots of high cost manual processes, many time consuming”
“Poor data governance, risk and compliance”
© 2014 SAP SE or an SAP affiliate company. All rights reserved. 3 Confidential
Standardization Shared Service
Real time reporting
Automation
Airlines Experience Best Practices
What does Finance Excellence means for an Airline?
© 2014 SAP SE or an SAP affiliate company. All rights reserved. 4 Confidential
Impacting the New Business Environment Comprehensive End-to-End Finance Back-Office Solutions from SAP
Accounting and Financial Close
Financial Planning and
Analysis
Treasury and Financial Risk Management
Collaborative Finance
Operations
Enterprise Risk and Compliance
Management
Collaborative Invoice to Pay
Travel Management
Receivables Management
Enterprise, Risk Management
Controls and Compliance Management
Access Governance
Accounting
Entity Close
Corporate Close
Develop and Translate Strategy
Planning, Budgeting and Forecasting
Profitability and Cost Management
Payments and Bank Communications
Cash and Liquidity Management
Debt and Investment Management
Monitoring and Reporting
Reporting and Disclosure
Financial Close Governance
Commodity Risk Management
Financial Shared Services
Financial Risk Management
International Trade Management
Fraud Management
Audit Management
Airlines Industry Extension
Route Profitability
IATA Clearing House (SIS)
Fuel Management
Flight Order
© 2014 SAP SE or an SAP affiliate company. All rights reserved. 5 Confidential
Drive business innovation
Keep the lights on
28%
72%
Forrester IT Survey, 2013
Drive business innovation
Keep the lights on
“
”
Limited Ability of CFOs to Support the Business
76% of Finance executives believe at least half their time should be on high-value planning and analytic activities, though only 55% achieve this Source CFO.com Research 2013
© 2014 SAP SE or an SAP affiliate company. All rights reserved. 6 Confidential
Beyond Airlines Finance Excellence Back-Office Integrated Revenue Analytics for Airlines
Ability to analyze passengers revenues based on the year comparison of issued revenue and flown revenue.
Analyze billions of PNR records and forecast future booking based on trends, weather condition, seasons (vacations), geography, gender, type of traveler, etc.
Effectiveness of promotions based on region, season, etc.
Ability to build predict fares for tickets with inputs like seasons, competitor reactions, customer choices, direct / hopping flights, code share, load, etc
Customer travel, choice, frequency, destinations, type of traveler trends from customer loyalty programs.
Analyze and predict passengers requirements, passenger in-flight purchases, music, movies, games, beverages, … to enhance at the end the Passenger Experience.
© 2014 SAP SE or an SAP affiliate company. All rights reserved. 7 Confidential
ERP
SAP has Evolved Significantly We are challenged by Similar Dynamics in Other Industries & have responded
Old Model
Times have changed
INFLECTION POINT
NEW SAP: New Business Outcomes
Legacy Company
ERP ERP BA
BA
Others1
2002 2007 2010
Cloud
Mobile
Analytics
Applications
Database & Technology
Powered by SAP HANA Product Solution Value
Industry & LOB
Solutions
2014
Airlines Excellence Back-Office Integrated Analytics for Airlines
© 2014 SAP SE or an SAP affiliate company. All rights reserved. 8 Confidential
SAP’s Next Generation Accounting(s) Solutions SAP HANA is delivering Integrated Revenue Analytics for Airlines
Operations Documents
Totals & Indices
Financial Accounting
Totals & Indices
Management / Sales Reporting
From … Stability
Processing
Analytics
Management / Sales Reporting
Financial Accounting
Flexibility
HANA Views
on the Fly
Pre-Defined Aggregates
Flexibility
Stability
Processing
Analytics Logical Documents
Operations Documents
… To
Airlines Benefits • Harmonized
internal and external reporting
• Account driven data model
• Significantly reduced reconciliation effort
• Higher flexibility in reporting and data customization
• Significantly reduced memory consumption
ERP
BI
HANA
© 2014 SAP SE or an SAP affiliate company. All rights reserved. 9 Confidential
Thank You Run Simple
fly… Simon Lescarcelle VP & Global Head of Transportation & Manufacturing Services SAP France 35, rue d’Alsace 92 300 Levallois-Perret M +33/615941017 F +33/146177988 mailto:[email protected]
Copyright © 2014 Oracle and/or its affiliates. All rights reserved.
Transformation in Revenue Accounting
Baljeet Nagi- ERP Sales Development & Strategy Leader
Copyright © 2014 Oracle and/or its affiliates. All rights reserved.
Safe Harbor Statement
The following is intended to outline our general product direction. It is intended for information purposes only, and may not be incorporated into any contract. It is not a commitment to deliver any material, code, or functionality, and should not be relied upon in making purchasing decisions. The development, release, and timing of any features or functionality described for Oracle’s products remains at the sole discretion of Oracle.
Oracle Confidential – Internal/Restricted/Highly Restricted 3
Copyright © 2014 Oracle and/or its affiliates. All rights reserved.
Oracle in Air Transportation
Over 60 of the world’s leading airlines use Oracle Applications
73 of the world’s top 100 airlines use Oracle Technology
47 of the world’s major airports (150 Airport sites) use Oracle Applications
20 of the world’s top 20 airlines get better results with Oracle
Copyright © 2014 Oracle and/or its affiliates. All rights reserved.
Strategic priorities for global CFOs: 2013-2015
CFOs Want to Modernize Finance
Restructure the Finance Skill Set
• Data analysis
• Systems expertise
• Business partnering
Leverage High-Impact Technologies
Improve Speed of Decision-Making
• Big Data
• Mobile
• Cloud
• Respond faster to internal and external clients
• Flex the business model in response to change
Source: Oracle-Accenture Research: Empowering Modern Finance: The CFO as Technology Evangelist, February 2014
5
Copyright © 2014 Oracle and/or its affiliates. All rights reserved.
Challenges in Airline Revenue Accounting
Revenue Accounting is a challenging component of airline accounting, encompasses large volume of transactions and unique reporting requirements for liability, revenue, taxes, fees, commissions etc.
• Lots of manual work in the processing of tickets / coupon • Multiple Data sources for Passenger Data(PNR data from global distribution systems,
alliance partners and other airlines) • Historical data and legacy system that need upgrading • Lack of real time revenue analysis from Reservation systems • Lack of real time posting to GL • Lack of real time analytics on performance and Management Reporting • Results in Higher Processing cost impacting P & L
Finance executives are tasked to evaluate the potential to centralise and streamline Revenue Accounting process in order to achieve reduce cost ,complexity and maximise ROIs
Copyright © 2014 Oracle and/or its affiliates. All rights reserved.
Transforming Revenue Accounting
• Oracle can work with IATA, the Airline community and our partners to transform traditional Revenue Accounting processing to modern Revenue Accounting, extending ERP Financials:
Provide Automation, Accuracy , Flexibility , Agility, Efficiency ,Performance, Security and Analytics.
• Deploy Cloud solutions for Tickets and Coupon processing (Order to Cash). Reduce infrastructure and outsourcing costs.
• Tightly integrated Revenue Accounting solution with General ledger and Account Receivables brings everything under one umbrella.
• Bringing the cost of own coupons processing at Zero cost.
• Reduce the cost of collection reconciliation (cash and credit card) process.
• Deploy SOA architecture to provide real time information to the business. This can be used to produce level 1 revenue result of a flight before it lands to destination.
Copyright © 2014 Oracle and/or its affiliates. All rights reserved.
Modern Finance Modern Cloud
Mobile Social
Analytics
8
Summary
World Financial Symposium 2014 World Financial Symposium 2014
Revenue Accounting –
Evolution of Systems
Raj Bhavnani, CFO, Mercator
Nick Coote, Director Strategic Development, Financial Exchange, IATA
Vipul Jain, CEO, Accelya
Joanna Thibault, Head of Ticketing & Finance, Amadeus
| |
So what is changing ?
Focus was on operations Deliver processes Manage costs Protect revenue Finance back office
Focus is on analytics Deliver results Eliminate cost Increase revenue Business partner
| |
• Skill sets of people • Move to a variable cost model • Anticipate what the business will need
What does this transformation mean ?
9
| |
The choice is yours !
Time is of essence – sense of urgency
Do you want to spend it solving operational problems that no one cares about ?
OR
Do you want to be part of the brain trust of your organisation ?
IATA Financial Exchange:
A vision of revenue accounting in the future
Nicholas Coote Director Strategic Development,
IATA Financial Exchange
Move away from the past History of paper documents Need for custom system development High cost of operation leads to corner-cutting,
and piecemeal out-sourcing, Leads to loss of control of costs
Manually-oriented processes, designed around said paper documents
2 Transformation in Revenue Accounting
Recognise the present Tickets may be electronic, but the concept is probably here for a while
yet We are all operating to standards, but may not be making the best use
of them We may not need to do revenue accounting the way we do it, but
revenue accounting we will need to do A huge industry has built up around the concept, and that encourages
inertia
3 Transformation in Revenue Accounting
Move into the future Much effort goes into basic data processing which
adds no value Turning data into information is the part that adds value
ERP systems of today are not the manual processes of the 50s, nor are they the batch systems of the 80s They can do a lot more
Split revenue accounting into industry-standard neutral data processing, and leave the ERP systems to deal with the accounting
Need to focus on customer value-add with NDC, rather than fighting over nickels and dimes in revenue accounting
4 Transformation in Revenue Accounting
We already have the infrastructure… …Let’s make more use of it!
ARC Compass is used in the AIA First & Final service, but it is a central ticket database of prorated sales values
ATPCO provides data enhancement services which can reduce the manual work of error correction on ticket data
SIS does interline billing and reporting, and can process billing automatically
Most airlines have modern ERP systems already Industry systems operate to industry standards,
maximizing consistency, simplicity and cost-effectiveness
And best of all, these are industry services, run for the benefit of the industry and managed with industry oversight!
5 Transformation in Revenue Accounting
So let us look at a simpler, lower-cost
future, where airlines can focus effort on
generating added value instead!
6 Transformation in Revenue Accounting
ACCOUNTING
- Should cover all revenues
- NDC will have a huge impact
- New forms of payments
- Agility to adapt to business needs
- Speed of Processing
- Cost & Productivity pressures
- Accounting Controls & Risk Management
ACCOUNTING
ASSURANCE
- Beyond conventional sales audit
- Cover full cycle- book to collected
- New forms of payments – newer
challenges
- Focus on prevention
- Co-partner in yield protection
ACCOUNTING
ASSURANCE
ANALYTICS
- Core to the function
- Not just a supplier of data, but also a
consumer
- Big data & sophisticated tools
• Strengthen the core function – Accounting
• Co-partner in managing revenue assurance
• Evolve with Analytics mind-set and
capabilities
© Copyright 2014 Accelya Holding World S.L. and its subsidiaries (hereinafter jointly referred as Accelya Group). All rights reserved. Contents in this document are confidential and proprietary to Accelya Group. No part of this document should be reproduced, published, transmitted or distributed in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, nor should be disclosed to third parties without prior written approval from Accelya Group.
THANK YOU
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IATA World Financial Symposium 2014
Let’s shape the future of travel
Joanna Thibault Head of Finance & Ticketing
Airline IT Solutions
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Page 2 Source: IATA, 2014 worldwide revenue forecast per passenger
departed
Industry net margins are very low…
… on average $5.42 per ticket
Page 2
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Page 3
Stand-alone solutions with limited integration & complex interfaces
Slow revenue reporting limiting decision making
Human-resource intensive activity area
Limited evolution capability to embrace new industry initiatives
Non optimized revenue recognition impacting cash flow & profitability
Airline revenue accounting still sub-optimal
© 2
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Turn revenue accounting into a strategic function
How can Amadeus help you?
Adapt to industry changes and to your evolving business needs
Thank you
Come see us at Booth #1
Or write us at
You can follow us on: AmadeusITGroup amadeus.com/blog amadeus.com
World Financial Symposium 2014 World Financial Symposium 2014
Revenue Accountants’
Perspective
Christian Albrespy, Director Financial Shared Services Center, Air France
Raghavan NRS, Head of Financial Reporting, Etihad Airways
Konda Reddy, Director of Finance, Qantas Airways
Kevin Thiel, Director Revenue Accounting, Alaskan Air
World Financial Symposium 2014 World Financial Symposium 2014
Track Closure Györgyi Szantner Head of Finance Services
British Airways