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Simplified Interline Settlement A fundamental change… Nicholas Coote Project Sponsor
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KUL – 20-22 Oct 20102010 ICH UG Meeting2 SIS is the project…. Board of Governors, IATA Top management IATA people and money IATA StB mobilisation Workshops at IATA regional offices
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KUL – 20-22 Oct 20102010 ICH UG Meeting3 Why SIS is important? Hitting the core of the process: paper Changing the way industry works
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KUL – 20-22 Oct 20102010 ICH UG Meeting4 Any organization, not only airlines
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KUL – 20-22 Oct 20102010 ICH UG Meeting5 Not just an IT project Business re-engineering Re-think global processes
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KUL – 20-22 Oct 20102010 ICH UG Meeting6 Spread the message in your organization Service providers Invoice creators Finance team Treasury
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KUL – 20-22 Oct 20102010 ICH UG Meeting7 Big, industry wide, global IATA: $millions, 4 years, 20 people 400 Airlines 80 industry suppliers +5,000 people $ +700 m SAVINGS
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KUL – 20-22 Oct 20102010 ICH UG Meeting8 SIS Vision Invoices are electronic and not backed by paper Prime passenger billings do not require paper invoices or coupon listings 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 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.
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KUL – 20-22 Oct 20102010 ICH UG Meeting9 Integrated Settlement (IS) - A new way Everything is data, with the choice being how you send or receive it Your choice of format does not affect your partner’s choice of format The e-invoice is the driver for settlement, not the ICH Web claim Miscellaneous claims now have their own format – IS- XML Because everything is data, invoicing can be done at the point of delivery, and monitored centrally
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KUL – 20-22 Oct 20102010 ICH UG Meeting10 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
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KUL – 20-22 Oct 20102010 ICH UG Meeting11 Important aspects to think about 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 Legal and financial management aspects of e-invoicing The concept of Charge Category and Charge Code Remember: more than 80, each with their own mandatory field contents There are major changes to UATP processing
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KUL – 20-22 Oct 20102010 ICH UG Meeting12 Miscellaneous billings 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 Over 80 business types have been identified and encoded in the design IS-XML serves the same purpose as IS-IDEC, but designed to work in conjunction with financial systems Revenue Accounting Manual chapter A13 has been rewritten, and has gone from 5 pages to nearly 100 pages
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KUL – 20-22 Oct 20102010 ICH UG Meeting13 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 members put far more than ten thousand times the number of invoices through SIS than the smallest; their SIS fees cannot be proportional
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KUL – 20-22 Oct 20102010 ICH UG Meeting14 SIS Fee Components ComponentICH Member ICH Web FeesSame as today ($1,500 annually) ICH Web/SIS Migration Surcharge Declines over time as Transaction Fees build up Dependent on type of member and # of invoices processed ($4,000 – $22,000 annually) IS Annual Fee Alternative to the ICH Web/SIS Migration Surcharge 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
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KUL – 20-22 Oct 20102010 ICH UG Meeting15 After SIS go-live Before you sign-up After you sign-up Before full migration After full migration* Through eternity ICH-WEB Fee SIS Migration Surcharge Transaction Fees IS Annual Fee SIS Fee Timing * “Full migration” means that you no longer submit claims outside of SIS (via the ICH-WEB)
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KUL – 20-22 Oct 20102010 ICH UG Meeting16 The timer is running SIS goes live in less than a year Initial feedback is that 25-50% of members will migrate in 2011 itself That means that members doing business with them also have to be prepared
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KUL – 20-22 Oct 20102010 ICH UG Meeting17 Don’t forget… Your SIS billings are standardised for both ICH and bilateral settlements Means that once migrated you can use SIS to bill any airline, whether or not they will settle through ICH Standardisation reduces costs and expands opportunities – look for the benefits
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KUL – 20-22 Oct 20102010 ICH UG Meeting18 Thank you. Email: sis@iata.org SIS Website: www.iata.org/sis www.iata.org/sis
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