In today's tough economic environment, the revenue accounting function will face some serious challenges. Some of these are:
1) Evaluation of what an airline can afford to do to remain competitive in the short term versus what they must do to be commercially viable in the future is a critical decision that will need to be taken. The increased cost associated with enhancing in-house, legacy systems to handle complex mandatory PRA changes needs to be compared to the investment cost required to implement new, state of the art, third party platforms.
2) Without capital investment in new integrated systems, how can the PRA department deliver real time revenue reporting and what are the tangible benefits of doing so? Quality and timeliness in Revenue Reporting remains a key stated objective for most airlines at a time when few can afford the investment required to deliver this.
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Contest Terms:
For Week 04 (Aug 25 th to Aug 31st, 2008), the winners will be announced on Monday, Sept 1st. Topic for Week 04 will close for comments at 12am EST, Sunday, August 31st.
Topic of Week 2: Driving efficiencies in Revenue Accounting
Comments
Comment by: Gautam Jain, WNS | Dated: 2008-08-11
With Airlines facing increased financial pressure from rising fuel prices, compounded by the effect of the credit crunch, all areas of the business must act quickly to increase operational efficiencies and drive higher profitability. What can the Revenue Accounting department do quickly to drive efficiencies within? Can fundamental changes, which will require investment in IT and simplifying the business, be delivered in a timely manner or must RA departments focus on quicker-to-implement initiatives to improve productivity and reduce costs? Is outsourcing perceive a necessary initiative in the current climate?
With economic globalisation and open skies, no one airline can create a global network by itself. In order to survive and develop, airlines have to cooperate with other partners in various forms including multilateral alliance cooperation even in areas such as passenger revenue accounting. Use of common revenue accounting systems across alliances can provide several operational efficiencies by:
1)Use of standard interfaces: Many airlines today are managing/ struggling to manage various heterogeneous interfaces from several airlines thus creating several cumbersome processes. Standard interfaces that meet common objectives can drive process efficiencies
2)Contract based revenue sharing: Moving away from the big bad world of proration and moving towards agreement values across alliance partners can help immensely.
3)Shared development costs across several airlines: It is common knowledge that development costs are huge for legacy in house systems. Use of common platforms can distribute development costs across carriers to enable meeting the dynamic requirements of the industry.
Comment by: parameswaran venkateswaran, WNS Global Services | Dated: 2008-08-12
Airline industry across the world is suffering due to increased fuel cost. This is an unavoidable expense which hits the bottom-line of airline profitability. Strategic planning is required to improve aircraft fuel efficiency and operate on routes which are predominantly high yield. Real time information from Revenue Accounting is an essential tool for implementation of strategic planning. Airlines should ask themselves - Does their current Revenue Accounting team have the right people & systems to support the need of the hour of Management?
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Contest Terms:
For Week 04 (Aug 25 th to Aug 31st, 2008), the winners will be announced on Monday, Sept 1st. Topic for Week 04 will close for comments at 12am EST, Sunday, August 31st.
Topic of Week 3: Optimizing and enhancing Revenue integrity is critical to an airline not only from external audit compliance perspective but also to protect interest of all the stakeholders.
Comments
Comment by: Raghunathan Thyagarajan, WNS Global Services | Dated: 2008-08-19
Current Scenario - Revenue Integrity is focused on external / compliance audit and basic sales audit.
Traditionally Revenue integrity checks largely focused on -
Balance sheet (Forward Sales Liability validation),
P&L (Revenue is consistent with operational data),
Validating Revenue and Yield by Sector / Class / Passenger Type and Fare Audit to identify violations committed by ticketing agents at the time of ticket issuance.
Significant time, effort is spent by Revenue Accounting team in most airlines to deliver on these basic expectations especially if the airline is using legacy PRA system consisting of several sub-systems with multiple hand-offs and interfaces. Given these challenges, airlines do not have the resources and the system to focus on identifying and plugging actual and / or potential revenue leakages.
This scenario has prompted several airlines to take the first step of moving to a new software platform and / or seek partners who can take over the responsibility of processing the transaction with high level of accuracy and meet compliance standards - ISO, PCI DSS and SOX etc.
New Scenario - Cost effective approach to enhancing value of Revenue Accounting function
By moving PRA processing to well managed, experienced vendors airlines not only reduce cost of processing but get clear visibility on all key operational and financial metrics of Revenue Accounting. This enables the airlines to work with the vendors to improve the metrics to contribute to their bottom lines e.g. improved accuracy of interline billing for airline by 1% resulted in EUR1.5M benefit, ability to manage seasonal fluctuation in outward billing volumes reduced the backlog and improved cash flow in one instance by almost US$35Million in one month.
Once the day-to-day operation of transaction processing is outsourced, Revenue Accounting teams shift their focus to identify and plug revenue leakage to enforce compliance to fare rules and protect against revenue dilution. This is possible by aligning with partners who offer state of the art Revenue Recovery software combined with significant experience in auditing and tracking revenue dilution through ticketing violations and fraudulent practices e.g. Airlines can recover loss due to RBD violation and Travel validity violation. The services offered are on contingency model i.e. airlines pay only if recoveries are identified and billed to the agents. Lead time to set up is very short with minimal set up costs.
Airlines today have access to Systems and Service Providers who can significantly reduce the cost of processing and enhance the revenue integrity. The new approach will allow Revenue Accounting team to take centre stage within an Airline especially when airline operations are severally affected by geo political economic crisis.
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Contest Terms:
For Week 04 (Aug 25 th to Aug 31st, 2008), the winners will be announced on Monday, Sept 1st. Topic for Week 04 will close for comments at 12am EST, Sunday, August 31st.
Topic of Week 4: How can Revenue Accounting ease the current financial burden faced by airlines
Comments
Comment by: Keith Harvey, WNS Global Services | Dated: 2008-08-25
Revenue Accounting plays a key role in protecting the airlines cash flow by firstly ensuring that all ticket sales are reported and paid in a timely manner. Secondly, it ensures that all OAL tickets are billed within the IATA guidelines with ideally all OAL uplifts being billed in the month of usage. Thirdly, an efficient revenue accounting process ensures that all refund claims are handled in a timely manner and within the limits prescribed by IATA and the EC directives.
Let us look at each of these in more detail.
Reporting of ticket sales - In today's tough economic environment, it is becoming essential for airlines to set up mechanisms to receive payment for their ticket sales as soon as the ticket is sold. Failure to ensure this discipline means the airline is offering services for which no payment has been received. Depending on the resources available in the PRA department, many airlines recover these 'unreported' sales within 3-15 months of usage. The ideal is that all 'unreported' sales should be realized within one month of usage.
When uplifting OAL coupons it is essential to the cash flow of the airline that these coupons are billed within the same month of uplift.Great emphasis is put on this task by a majority of the airlines.However if the airline does not have adequate resources in Interline then this task can be seriously impacted. Conversely when an airline receives invoices from other carriers, known as Inward billing, then again the receiving airline will be settling the IATA invoice prior to auditing the actual invoice. IATA agreed time limits are in place and we see many airlines that are right up to the time limits rejecting bills.This has a serious negative impact on an airlines cash flow.
Refunds must be processed within agreed timelines. Failure to perform this task has a negative impact on the customer experience and can jeopardise a passenger's willingness to travel with the airline again in the future.
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Contest Terms:
For Week 04 (Aug 25 th to Aug 31st, 2008), the winners will be announced on Monday, Sept 1st. Topic for Week 04 will close for comments at 12am EST, Sunday, August 31st.
United Airlines
Process: Passenger Revenue Accounting
Revenue Accounting and Recovery for United Airlines resulting in significant cost savings, process efficiencies and enhanced recoveries
Key highlights of the WNS solutions:
Manage end-to-end Passenger Revenue Accounting operations including complex functions of interline, auditing, investigation, refunds and collections
Stringent service level agreements
Multi-location delivery to ensure Business Continuity
Highly skilled staff - 80% are IATA certified
Proprietary staff training capabilities
Rigorous Quality Assurance and Six-Sigma program
Robust program management and migration methodology
Improved Service levels:
Significant cost savings
Initiatives to increase productivity levels
Improved service quality
Devoted United resources to help drive strategic initiatives
Guaranteed process efficiencies every year
Comprehensive MIS and reporting
Program Achievements:
Successful knowledge transfer and training of India staff to ensure quick ramp-up
Process Improvement through automation and re-engineering
Leading airline from Caribbean region
Process: Passenger Revenue Accounting
Helping leading airline from Caribbean region transform its
revenue accounting process
Key features of the WNS solution include:
A fully managed service ensures the client does not get challenged by infrastructure, software license fees or capacity of trained personnel
End-to-end service delivered on JADE, the WNS Passenger Revenue Accounting platform, which is scalable, has automated accounting and workflow platform with fast and simple customizable options
Automating critical processes such as invoice generation, accounting, revenue processing and MIS, which were previously done manually
Transition and production time of four months, against the industry standard of eight months
Benefits delivered by the team at WNS include:
Reduction in operational costs by approximately 30% year on year
Increased the revenue earning potential by
Significant reduction in turnaround times in inward billing
Successful implementation of weekly outward billing cycle
Increased transparency by consistently declaring matched revenue
Are You Capable? Deborah Kops
Chief Marketing Officer - WNS Global Services
Whether organizations are transforming business processes by setting up captive, shared services centers, outsourcing or structuring some combination of both, the moves represent a major change for stakeholders, business lines, and end users. Organizations tend to focus on leadership from the top as the critical success factor for implementation of global services. Yet they ignore the fact that visible endorsement cannot substitute for a retained team competent to juggle a myriad of factors when developing a solution, determining the pace of change, dealing with a various personnel issues, and managing a relationship that is based on often alien commercial principles.
Surviving The Perfect Storm Peter Grover
Executive Vice President - Travel & Leisure,WNS Global Services
Having met the challenges resulting from 9/11 and changing business models, airlines find themselves again under siege, primarily from rising fuel prices.
Spiraling costs and falling demand as the credit crunch bites, has pushed many carriers over the edge. Airlines need to be strategically proactive to weather the storm.
Transition Secrets Of Winston Churchill Deborah Kops
Chief Marketing Officer - WNS Global Services
Try the words of the words of the famous Statesman and Orator, Winston Churchill.
"Every day you may make progress. Every step may be fruitful. Yet, there will stretch out before you an ever-lengthening, ever-ascending, ever-improving path. You know, you will never get to the end of the journey. But this, far from discouraging, only adds to the joy and glory of the climb."
Free Webinar
“Driving Higher Profitability through
Efficient Revenue Recovery”
To view Webinar
click here System Requirement: IE6 and above / Firefox 1.2 and above. Flash plug-in 8 and above
Synopsis:
Last month, Brian Pearce, the International Air Transport Association’s noted economist, said that the aviation industry was facing its biggest crisis in 30 years. Soaring oil prices and a collapse in consumer confidence has left airlines in a worse state than after September 11.
It is estimated that a one dollar increase in oil prices adds $1.6 billion to the industry's operating costs. Accentuating this crisis is the slump in consumer confidence; for the first time in a number of years the number of business class passengers across the industry has dropped. In such an environment, optimizing revenue by increasing efficiencies in processes such as revenue management becomes an even greater priority. It is estimated that revenue leakage across the airline industry could be somewhere between 2% and 5% of revenues, resulting in a loss of between $5 billion and $16 billion per annum.
This webinar will share insights from leading airlines that are optimizing their revenue management processes and developing new strategies for plugging revenue leakage.
Presenter:
Michelle Scarsbrook Senior Vice President, Revenue Recovery,
WNS Global Services
Michelle heads the Revenue Recovery Group within WNS’ Travel and Leisure Services team. Michelle has over 15 years experience in the airline industry, specializing in revenue recovery and passenger revenue accounting arena during the last 10 years. Prior to joining WNS, Michelle was responsible for establishing the Airline Revenue Recovery division at PRG-Schultz International, a leading auditing company, and for defining and implementing British Airways’ Revenue Recovery strategy. Michelle is a fellow of the Association of Certified Accountants and holds a MBA from Lancaster University.
