James SHANNON RA44 – BUD 14 Sept 2010 SIS Functional Review James SHANNON RA44 – BUD 14 Sept 2010

Goal & Agenda Project Overview The Need For IS Vision IS Solution & Features Benefits & Changes Next Steps To familiarize you with Simplified Interline Settlement and prepare you for tomorrow’s breakout sessions SIS – RA44 –SIS Review 14 Sept 2010

Project Overview SIS – RA44 –SIS Review 14 Sept 2010

Interline Settlement - Today Paper invoices, with coupon listing, coupons, rejects, supporting documents (monthly) Billed Entity Settlement sheets – (weekly) ACH Recap sheets - weekly Billing Entity F3– (weekly) ICH F12 – (weekly) F1 – net amounts of inv F2 - summary Cargo IDEC File (monthly) ATPCO Cargo IDEC File (monthly) Pax IDEC File (monthly) (incl F&F pre IDEC Validation) Pax IDEC File (monthly) prorate engine prorate engine 2 History of interline billing Based on issuing and receiving paper long before computers existed Large numbers of people in factory-type operations Batch-oriented Boxes of paper moved around the department in sequence as each sub-process completed Invoicing was done manually, and supported by boxes of tickets and supporting calculations All this had to be shipped to airlines, frequently getting delayed or even lost Systems were usually built as replications of manual processes We now have 3 different data streams (Invoices, IDEC and Claims), often with different data Going forward from May 2008 ET is mandatory in the settlement systems, and will become universal as paper fades away IDEC is already mandatory for interline ET ICH is now paperless, and running on weekly cycles, with flexible input requirements, Encourages faster billing Reduces batch sizes and risk However… Weekly batching and billing means more work, and Weekly IDEC requires substantial development work, and Reconciliation problems between invoices, IDEC and claims have got worse, and The ACH has already voted to abolish paper billing support, so We have an opportunity to rethink the interline process to take advantage of an all-data world ARC-Compass (NFP storage) GDSs BSPs Previously released sales record AIA F&F F&F: receives NFP value SIS – RA44 –SIS Review 14 Sept 2010

SIS Vision Fundamentally change, simplify and integrate the interline settlement process, delivering tangible financial benefits to the industry. Invoices are electronic and not backed by paper Prime passenger billings do not require paper invoices or coupon listings IDEC formats are maintained with increased record types 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 Settlement action directly from ET systems is enabled 3 SIS – RA44 –SIS Review 14 Sept 2010

IS Solution & Features SIS – RA44 –SIS Review 14 Sept 2010

Interline Settlement - Today Paper invoices, with coupon listing, coupons, rejects, supporting documents (monthly) Billed Entity Settlement sheets – (weekly) ACH Recap sheets - weekly Billing Entity F3– (weekly) ICH F12 – (weekly) F1 – net amounts of inv F2 - summary Cargo IDEC File (monthly) ATPCO Cargo IDEC File (monthly) Pax IDEC File (monthly) (incl F&F pre IDEC Validation) Pax IDEC File (monthly) prorate engine prorate engine 2 History of interline billing Based on issuing and receiving paper long before computers existed Large numbers of people in factory-type operations Batch-oriented Boxes of paper moved around the department in sequence as each sub-process completed Invoicing was done manually, and supported by boxes of tickets and supporting calculations All this had to be shipped to airlines, frequently getting delayed or even lost Systems were usually built as replications of manual processes We now have 3 different data streams (Invoices, IDEC and Claims), often with different data Going forward from May 2008 ET is mandatory in the settlement systems, and will become universal as paper fades away IDEC is already mandatory for interline ET ICH is now paperless, and running on weekly cycles, with flexible input requirements, Encourages faster billing Reduces batch sizes and risk However… Weekly batching and billing means more work, and Weekly IDEC requires substantial development work, and Reconciliation problems between invoices, IDEC and claims have got worse, and The ACH has already voted to abolish paper billing support, so We have an opportunity to rethink the interline process to take advantage of an all-data world ARC-Compass (NFP storage) GDSs BSPs Previously released sales record AIA F&F F&F: receives NFP value SIS – RA44 –SIS Review 14 Sept 2010

Integrated Settlement Settlement Processes ICH ACH IS-WEB IS-WEB Billed Entity Billing Entity “Digital Signature” Company IS-XML IS-XML Overall Processes Overall Processes Billing & Invoicing Processes IS-IDEC IS-IDEC Central Repository 2 Prorate Engine Usage File Processes at time of Sales NFP engine ARC COMPASS™ SIS – RA44 –SIS Review SIS – Materials – RA42 Breakout Interfaces & Validation 9 14 Sept 2010 9

IS Overview – One Level Down ICH ACH IS-WEB Interface ICH Interface ACH Validation IS-WEB Supp. Doc. Invoice PDF Supp. Doc. IS-XML Billing Outward Billing Record DB IS-IDEC IS-XML Supp. Doc. IS-IDEC Supp. Doc. Digital Signature Billing Value Confirmation Validation & Correction (IS-WEB) Value Determination Usage File Digital Signature ATOS ATPCO Billing Carrier ATPCO SIS – RA44 –SIS Review 14 Sept 2010

No F12 files. No recap sheets, either. Nothing that you submit to the ICH or ACH today can be submitted after migration. SIS – RA44 –SIS Review 14 Sept 2010

Main Features of IS File Formats & Validation Passenger Time of Sales – NFP final, NFP non-final, and Own Prorate Storage Value Determination & Autobilling Sampling Correspondence Audit Trail Differences for Cargo Differences for Miscellaneous Bringing It All Together Member Administration Processing Dashboard Document Storage SIS – RA44 –SIS Review 14 Sept 2010

File Formats & Validation SIS – RA44 –SIS Review 14 Sept 2010

Billing & Invoicing Processes File Formats Integrated Settlement Format Conversion: Billed Entity’s choice of format does not depend on the billing carrier’s Settlement Processes ICH ACH IS-WEB IS-WEB Billed Entity Billing Entity “Digital Signature” Company IS-XML IS-XML Enabling Processes Enabling Processes Billing & Invoicing Processes IS-IDEC IS-IDEC Central Repository Prorate Engine Usage File Processes at time of Sales NFP engine ARC COMPASS™ How are files, including supporting documents, sent & received? Validation happens on all submissions, but is important to mention here regarding timeframes and “linking” to existing records. Receive (or download) invoices Send files (or enter online) Validation Format Conversion SIS – RA44 –SIS Review 14 Sept 2010

File Formats – IS-IDEC No longer data exchange file, but rather used to create an invoice and settlement file Similar to IDEC, with enhancements: Existing fields made mandatory (source codes, etc) New records added (Rejection Memos, tax breakdowns, etc) New fields added (for e-billing, additional info, etc) Unnecessary records / fields removed (batch total records, etc) 500 byte records (instead of 160 byte) Every carrier will need system enhancements to support IS-IDEC SIS – RA44 –SIS Review 16 14 Sept 2010

File Formats – IS-XML New XML format for Integrated Settlement Based on IATA Aviation Invoice Standard, used by IATA InvoiceWorks Identical fields and validation requirements to IS-IDEC Every carrier will need to make system enhancements to support IS-XML IS-IDEC vs. IS-XML is an IT decision – it is immaterial to the RA department Potential Benefits of IS-XML IS-XML format is more flexible and thus better than IS-IDEC for variable record structure (like Miscellaneous billings) Potential Benefits of IS-IDEC Relatively little system development for carriers with a sophisticated IDEC solution in place already IS-IDEC format is more efficient (processing, storage, and internet bandwidth) than IS-XML for a fixed record structure SIS – RA44 –SIS Review 17 14 Sept 2010

IS-WEB Record Structure Web-based user interface to create and receive invoices and records Identical fields and validation requirements to IS-IDEC and IS-XML Validation in real-time minimizes possibility of later validation errors Potential Benefits The web interface is hosted by IATA, so no system development is required by carriers Potential Negatives More internet bandwidth will be required than file formats, and the connection will have to be stable Won’t be as user-friendly as a dedicated, local system  Not an alternative to a Revenue Accounting system SIS – RA44 –SIS Review 18 14 Sept 2010

IS-WEB For Everybody IS-WEB is also used for other web-based services Audit Trail Pax & Cargo Correspondence Online Corrections after validation failure Processing Dashboard Airline profile updates Web Analysis Reports View and print invoices in a standard format Extensive user access controls (your company’s administrator can grant detailed permissions) SIS – RA44 –SIS Review 19 14 Sept 2010

Breakdown Records Breakdown Records have been added where necessary to provide for detailed, possibly repeating, data and to provide for large amounts of text E.g., a coupon can have 0 or more tax breakdown records, each detailing a tax type and amount Examples Coupon Prime Billing breakdown records: Tax, VAT breakdown Breakdown records for Rejection, Billing, Credit Memos: Reason Breakdown, Coupon Breakdown (with Tax & VAT) SIS – RA44 –SIS Review 20 14 Sept 2010

Example Breakdowns (Pax Rejection Memo) (SFI = 21) Reason Breakdown (SFI = 31) Coupon Breakdown (SFI = 32) VAT Breakdown (SFI = xx) Reason Breakdown (SFI = 31) Coupon Breakdown (SFI = 32) VAT Breakdown (SFI = xx) Coupon Breakdown (SFI = 32) VAT Breakdown (SFI = 34) Tax Breakdown (SFI = 33) Tax Breakdown (SFI = 33) Tax Breakdown (SFI = 41) SIS – RA44 –SIS Review 21 14 Sept 2010

Example Breakdown Invoice Invoice Header Information Prime Billings (Source Code Summary) 1st Stage Rejections (Source Code Summary) 2nd Stage Rejections (Source Code Summary) 3rd Stage Rejections (Source Code Summary) Billing Memos (Source Code) Credit Memos (Source Code Summary) Invoice Summary Invoice VAT Summary ($100) Invoice VAT Breakdown ($80) Invoice VAT Breakdown ($20) SIS – RA44 –SIS Review 14 Sept 2010

Example Breakdown Billing Memos ($100) (Source Code Summary) VAT Summary ($20) VAT Breakdown ($5) SIS – RA44 –SIS Review 14 Sept 2010

Example Breakdown Billing Memo #3 ($40) Coupon #1 ($10) VAT Summary VAT Breakdown (multiple) Tax Summary Tax Breakdown (multiple) SIS – RA44 –SIS Review 14 Sept 2010

Billing & Invoicing Processes Validation Integrated Settlement Validation: Guarantees links between records (e.g. 2nd and 1st RMs) Enforces timeframes and “order” (1st RM -> 2nd RM -> 3rd RM) Ensures file is properly formed Other validations Settlement Processes ICH ACH IS-WEB IS-WEB Billed Entity Billing Entity “Digital Signature” Company IS-XML IS-XML Enabling Processes Enabling Processes Billing & Invoicing Processes IS-IDEC IS-IDEC Central Repository Prorate Engine Usage File Processes at time of Sales NFP engine ARC COMPASS™ How are files, including supporting documents, sent & received? Validation happens on all submissions, but is important to mention here regarding timeframes and “linking” to existing records. Receive (or download) invoices Send files (or enter online) Validation Format Conversion SIS – RA44 –SIS Review 14 Sept 2010

Examples of Validation Format Rules Ensures data types (e.g. numeric/alphanumeric), length, etc as defined Correct Values e.g. Settlement method cannot be “ACH” if both airlines are only ICH members Mandatory Fields Source Code, Ticket Issuing Airline, Coupon Number, etc Rejection & Correspondence Timeframes and Order Enforced 1st RM  2nd RM  3rd RM  Correspondence Mandatory Breakdown Records Are Present Tax breakdown records are present if coupon tax is populated and the breakdown record sums match the tax field Billing entity will be notified of validation results Invoices (and possibly files) failing validation will not go any further SIS – RA44 –SIS Review 27 14 Sept 2010

Passenger SIS – RA44 –SIS Review 14 Sept 2010

Time of Sales – Now (Optional) Billed Airline Settlement sheets – (weekly) ACH Recap sheets - weekly Billing Airline F3– (weekly) ICH F12 – (weekly) F1 – net amounts of inv F2 - summary ATPCO Pax IDEC File (monthly) (incl F&F pre IDEC Validation) Pax IDEC File (monthly) prorate engine prorate engine ARC-Compass (NFP storage) GDSs BSPs Previously released sales record Sales Records, NFPs Sales Exchange and F&F processes as they exist today AIA F&F F&F: receives NFP value All: May receive sales records Sales Records Optional Proration, Storage, Switching SIS – RA44 –SIS Review 29 14 Sept 2010 29

Billing & Invoicing Processes Processes at time of Sales Time of Sales – With IS Integrated Settlement Settlement Processes ICH ACH IS-WEB IS-WEB Billed Airline Billing Airline “Digital Signature” Company IS-XML IS-XML Enabling Processes Enabling Processes Billing & Invoicing Processes IS-IDEC IS-IDEC Central Repository Prorate Engine Usage File Processes at time of Sales Very similar to today, but with the own prorate forwarding & storage and more control over the process via the airline profile Uses same record structures as today ARC COMPASS™ NFP engine Sales Records or Own Prorates Sales Records, NFPs, & Sales Carrier’s Own Prorates Optional Proration (final & non-final), Storage, Switching SIS – RA44 –SIS Review 30 14 Sept 2010 30

Neutral Fare Prorates – With IS NFP engine will be available to carriers for FIRST & FINAL™ (NFP Final) and non-F&F (NFP non-final) purposes NFP non-final could minimize rejections without any obligation by the carriers Own prorate storage and switching will allow the sales carrier to upload prorates, which are then forwarded or made available to the billing carrier SIS – RA44 –SIS Review 31 14 Sept 2010

Time of Billing – Now Pre-IDEC Validation for F&F NFP values Billed Airline Pre-IDEC Validation for F&F NFP values (updates the PMI) Billing Airline ATPCO Pax IDEC File (monthly) (incl F&F pre IDEC Validation) Pax IDEC File (monthly) prorate engine prorate engine ARC-Compass (NFP storage) GDSs BSPs Previously released sales record Carrier submits billing file (might contain F&F values that we talked about at time of sales). Pre-IDEC occurs if it’s a F&F value AIA F&F F&F: receives NFP value All: May receive sales records SIS – RA44 –SIS Review 32 14 Sept 2010 32

Submitting Billing Information – With IS Billing File / Data (similar to today) Integrated Settlement Billing File / Data (similar to today) Settlement Processes ICH ACH IS-WEB IS-WEB Billed Airline Billing Airline “Digital Signature” Company IS-XML IS-XML Enabling Processes Enabling Processes Billing & Invoicing Processes IS-IDEC IS-IDEC Central Repository Prorate Engine Usage File Processes at time of Sales Very similar process as occurs today ARC COMPASS™ NFP engine Billing Value Confirmation (Leaves “Original PMI”, updates “Value Confirmation PMI”) SIS – RA44 –SIS Review 33 14 Sept 2010 33

Time of Billing – IS Value Determination Billing File / Data (similar to today) Integrated Settlement Billing File / Data (similar to today) Settlement Processes ICH ACH IS-WEB IS-WEB Billed Airline Billing Airline “Digital Signature” Company IS-XML IS-XML Enabling Processes Enabling Processes Billing & Invoicing Processes IS-IDEC IS-IDEC Central Repository Prorate Engine Usage File Processes at time of Sales NFP engine ARC COMPASS™ Once data is stored in ARC COMPASS®, what can be done with it? Value Determination can retrieve the prorates from COMPASS® on request. Also will include Excess Baggage prorates. In addition to any prorate switching that is done at time of sales. Usage File Prorate Values SIS – RA44 –SIS Review 34 14 Sept 2010 34

Time of Billing – IS Auto-Billing Billing File / Data (similar to today) Integrated Settlement No Billing File From Carrier Settlement Processes ICH ACH IS-WEB IS-WEB Billed Airline Billing Airline “Digital Signature” Company IS-XML IS-XML Enabling Processes Enabling Processes Billing & Invoicing Processes IS-IDEC IS-IDEC Central Repository Prorate Engine Usage File Processes at time of Sales NFP engine ARC COMPASS™ Once data is stored in ARC COMPASS®, what can be done with it? Auto-Billing is the next step of Value Determination and will create a weekly billing file on behalf of the airline. Usage File Billing and Invoice Files Created Within IS Daily Revenue Recognition File Weekly Invoice Posting File SIS – RA44 –SIS Review 35 14 Sept 2010 35

Sampling Provisional Invoice (as today with prime coupon billing, but with elements from Forms A and B) Universe Adjustment (Form C) Digit Evaluation (Forms D and E) Form G (ACH) Rejection Memos & Correspondence (as today with non-sample but with elements from Forms F and XF)  All via IS-IDEC, IS-XML, and IS-WEB SIS – RA44 –SIS Review 36 14 Sept 2010

Pax & Cargo Correspondence Integrated Settlement Settlement Processes ICH ACH IS-WEB IS-WEB Billed Airline Billing Airline “Digital Signature” Company IS-XML IS-XML Enabling Processes Enabling Processes Billing & Invoicing Processes IS-IDEC IS-IDEC Central Repository Prorate Engine Usage File Processes at time of Sales NFP engine ARC COMPASS™ Correspondence is an exception to the previous slide and can only be submitted / received via IS-WEB. Receive Correspondence (including attachments) Enter Correspondence (including attachments) Validation SIS – RA44 –SIS Review 37 14 Sept 2010 37

Pax & Cargo Correspondence Correspondence can include an “authority to bill” flag which identifies when the authority to bill has been issued Not tied to settlement periods like transactions in Integrated Settlement – real-time and similar to e-mail but via IS-WEB interface Validation ensures no “cross-over” – correspondence can only be in reply to another correspondence (or 3rd-stage RM) and cannot be out-of-order SIS – RA44 –SIS Review 38 14 Sept 2010

Audit Trail & Rejection History With operational data being stored: Future records (e.g. rejections) don’t need supporting documents re-attached IS-WEB can be used to search and take action on previous billings: Search & browse through all records for which your carrier billed or was billed Drill down through tickets, coupons, tax breakdowns, correspondences, etc View audit trail of linked correspondences, rejections, and prime billings Find outgoing correspondences that haven’t been responded to Go directly to appropriate action (create RM, create correspondence, create billing memo) All the operational data is being stored; what can be done with it? SIS – RA44 –SIS Review 39 14 Sept 2010 39

Audit Trail (example view) Activity Date Record / Supporting Docs 1st Correspondence 1 May $35; “I do not agree with your calculation…” 3rd Rejection 1 Apr $50; Long Explanation.doc 2nd Rejection 1 Mar $100; “See attached”; ticket.jpg 1st Rejection 1 Feb $100; “No coupon in our system” Prime Billing 1 Jan $100 Highly simplified Create Correspondence SIS – RA44 –SIS Review 40 14 Sept 2010 40

Key Differences for Cargo & Misc SIS – RA44 –SIS Review 14 Sept 2010

Key Differences for Cargo All cargo record types also represented in IS-IDEC, IS-XML, and IS-WEB The IATA e-freight project will introduce e-electronic formats (structured data) for these supporting documents over time Before then, carriers can bilaterally decide to use e-electronic formats, or to not transfer supporting documents at all SIS – RA44 –SIS Review 14 Sept 2010

Key Differences for Miscellaneous IS-IDEC cannot be used for Miscellaneous billings (only IS-XML and IS-WEB) All Miscellaneous billings are uniquely defined by a charge category and charge code, allowing for routing to the correct person/department, automatic posting, or even automatic reconciliation Examples: Charge Category Charge Code GroundHandling Baggage Cargo PartnerAlliance FF Miles SIS – RA44 –SIS Review 14 Sept 2010

Bringing it Together SIS – RA44 –SIS Review 14 Sept 2010

Bringing it All Together Member Administration will contain centralized preferences for your company: User Administration with the ability to create users and roles, customize user permissions Member Profile to set your own preferences, such as: Who to contact for ICH alerts, file validation failures, etc Rules as to how IS will operate for your company (apply digital signatures, allow corrections, etc) Processing Dashboard will provide a centralized overview of all submitted files and their statuses throughout the Integrated Settlement SIS – RA44 –SIS Review 14 Sept 2010

Supporting Documents Supporting documents can be attached to most record types (including Pax Prime Billings, Cargo, Miscellaneous) Two types of supporting documents: Electronic Presentation - Supporting document that is digital but not in a defined and structured format. The document might be a PDF file or an image that a computer can read but not extract data from. E-Electronic Document – Supporting document that is in a defined and structured format which can be parsed by a computer. Example formats are IDEC, XML, or CSV. SIS – RA44 –SIS Review 46 14 Sept 2010

Supporting Documents – With IS Integrated Settlement Settlement Processes ICH ACH IS-WEB IS-WEB Billed Airline Billing Airline “Digital Signature” Company IS-XML IS-XML Enabling Processes Enabling Processes Billing & Invoicing Processes IS-IDEC IS-IDEC Central Repository Prorate Engine Usage File Processes at time of Sales NFP engine ARC COMPASS™ A specific look at supporting docs Batch Transfer e.g. FTP Batch Transfer e.g. FTP SIS – RA44 –SIS Review 47 14 Sept 2010 47

Central Repository & Supporting Docs What? Any type of accepted supporting document (image, PDF, etc) How long? As long as the data is operationally required When? Before or after the associated record is uploaded (with “pending attachments” flag, which allows for notifications if not uploaded) How? Discussed in more detail during the Breakout Sessions What?: Limitations may be put in place to keep the size down (no TIFFs, for example) How Long?: Time limit + buffer period, reset every time something new happens (e.g. rejection of rejection) How?: Could be embedded in the XML file, could be via FTP or a web (HTTP) POST, etc SIS – RA44 –SIS Review 48 14 Sept 2010 48

Benefits & Changes SIS – RA44 –SIS Review 14 Sept 2010

Key Benefits of IS – Billing Carrier Substantial savings due to: Reduction in paper, postage and courier fees Reduction in internal paper handling and supply chain efforts No more loss of supporting documents and re-creation of invoices Automation of billing directly from uplifts (e.g. Auto-Billing) Optional à la carte service of “Integrated Settlement” 3 SIS – RA44 –SIS Review 14 Sept 2010

Key Benefits of IS – Billed Carrier Substantial savings due to: Reduction in internal paper handling and supply chain efforts (e.g. registration, and reconciliation of invoices to payment) Automated data Less manual intervention Data quality improvements on IS-IDEC Pax Rejection Memos, Billing and Credit Memo electronically Cargo Original AWB, Rejection and Charge Memo electronically Supporting Documents immediately available in electronic presentation 2 SIS – RA44 –SIS Review 14 Sept 2010

Key Benefits of IS Rejection Memo & Correspondence process improvements due to: Enforcement of RAM rules (RM stage and correspondence) Opportunity to detect duplicate rejections of the same original billing All rejections and correspondence link to previous billings; information and supporting documents do not have to be re-uploaded Time-limit reduction possibilities for Rejection Memos and Correspondence Risk management and process improvements due to: Fewer items outstanding for a shorter period of time Future potential time-limit reduction for prime / original billings Benefits to the environment due to reduction of paper and shipping Alliance objectives complemented by SIS SIS – RA44 –SIS Review 14 Sept 2010

Airline Changes (where applicable) Change from IDEC to IS-IDEC 500 bytes instead of 160 bytes Follow rules in RAM Some detail records mandatory (e.g. taxes) Other elements mandatory (e.g. Source Code) Choose and implement other submission formats (IS-XML, IS-WEB) Prepare to scan and upload supporting documents Implement e-billing (possible legal implications) 4 SIS – RA44 –SIS Review 14 Sept 2010

Next Steps SIS – RA44 –SIS Review 14 Sept 2010

Next Steps This Week Back at Your Office Breakout Sessions Back at Your Office Airline Business Case (on the SIS website) IS Participation Guide (see the breakout session) Internal Planning and Budgeting (based on the IS Participation Guide and the Migration breakout session) SIS – RA44 –SIS Review 14 Sept 2010

Thank you. SIS Website: www.iata.org/sis SIS – RA44 –SIS Review 14 Sept 2010