Simplified Interline Settlement RA 44 SIS Overview

Simplified Interline Settlement RA 44 – SIS Overview Nicholas Coote Director Industry Clearing Services

SIS Vision Fundamentally change, simplify and integrate the interline settlement process, delivering tangible financial benefits to the industry. Ö Invoices are electronic and not backed by paper Ö Prime passenger billings do not require paper invoices or coupon listings Ö Passenger rejects, including any attachments, are submitted electronically without paper Ö Cargo and Mail billings are electronic and paperless Ö Miscellaneous billings (including any supporting information) are electronic, whether as data or with attachments Ö IDEC concept is maintained as IS-IDEC but with extended record lengths and new types Ö Settlement action directly from ET systems is enabled – Auto-billing SIS P 3 – Materials – RA 44 Plenary 2 September 2010

Think about your IS Implementation Ö You’ll save money by replacing today’s processes with IS Ö But the greatest potential of IS comes from completely rethinking your processes (especially in Misc) Ö Going forward, you should think about IS holistically SIS P 3 – Materials – RA 44 Plenary 4 September 2010

SIS Phases - Overview Phase 1 Feasibility Phase 2 Requirements Phase 3 a RFP Phase 3 b Analysis Phase 3 c Dev/Test/Pilot Phase 1 – July 2007 to September 2007: Ö 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: Ö Requirements gathering & RFI Phase 3 a – November 2008 to Feb 2009: Ö Ö RFP & Vendor Selection Internal Business Case: Project & recurring costs, costs to the industry Phase 3 b – March 2009 to December 2009: Ö Ö Airline Business Case, Vendor contracting, Analysis, Requirement Finalizations IATA Stage Gate Review Phase 3 c – January 2010 to August 2011: Ö Development, Test and Acceptance, Pilot Test Move to Operation – September 2011 SIS P 3 – Materials – RA 44 Plenary 5 September 2010

Timeline Phase 3 High-level Project Plan Nov 08 – Dec 09 Jan 10 Apr 10 May 10 – Feb 11 SIS P 3 a/b – RFP & Specification Mar 11– Apr 11 May 11 – Aug 11 Sep 2011 October 2011 Nov 11 Sep 2012 Apr 2013 Vendor SIS P 3 c - Development & Pilot Requirements review Development & System test UAT – Acceptance Tests Pilot run IATA Airlines Steering Group 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 SIS P 3 – Materials – RA 44 Plenary 6 September 2010

Project Update Ö Project Status Ö Ö Ö Pilot Kick Off completed - 5 th and 6 th of May, YMQ Interface Kick-Off - 21 st and 22 nd of June, YMQ All ISD’s with 3 rd parties signed off Key milestones agreed Screen Prototype review with airlines and others Ö Upcoming Activities Ö Ö User interface optimisation Test Strategy finalization Acceptance testing Pilot testing SIS P 3 – Materials – RA 44 Plenary 7 September 2010

Objectives of the Pilot test Ö Ö 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) Ö But it is not : Ö A formal sign-off on the application acceptance from industry – IATA does it Ö Full coverage test – Acceptance Test done by IATA prior Pilot testing SIS P 3 – Materials – RA 44 Plenary 8 September 2010

Pilot Participants Pilot Name Adria Air Austral Air China Alitalia Air India American British Airways China Airlines TBD – ACH menber IATA JP UU CA AZ AI AA BA Pax Mona. Lisa Edgar IPRA Sirax REVERA in-house Cargo Champ Edgar Cargo Spot Misc in-house Edgar GHCS Rapid MBS SAP in-house CI in-house TBD ? ? XB SAP Emirates EK Rapid Lufthansa LH Sirax SAP SITA XS SIS P 3 – Materials – RA 44 Plenary Kenan 9 September 2010

Steering & Working Groups Airline participation has been essential to the progress that SIS has made: Ö Steering Group Ö Passenger WG Ö Cargo WG Ö Miscellaneous WG Over 60 participants from over 30 carriers, from ICH and ACH Ö ICH Operations WG SIS P 3 – Materials – RA 44 Plenary 10 September 2010

Note on Miscellaneous Ö Misc billing is subject to the biggest changes of all Ö No data standards currently in use – no IDEC equivalent Ö Huge variations in invoices compared to passenger and cargo Ö A ticket is a ticket, and an AWB, but a catering invoice has almost nothing in common with an engineering invoice or a GDS billing Ö IS-XML serves the same purpose as IS-IDEC, but designed to work in conjunction with financial systems Ö Over 80 business types have been identified and encoded in the design Ö RAM A 13 has been rewritten, and has gone from 5 pages to over 60 pages, without the IS-XML breakdown Ö Full details and breakouts will be provided at the ICH User Group in KUL 20 -22 October SIS P 3 – Materials – RA 44 Plenary 11 September 2010

Why it is important to be in KUL Ö There is substantial business re-engineering to be done at the outset, as invoicing is often originated from many sources Ö Person in charge of invoice not usually from the business end, unlike Revenue Accounting. This is an extra challenge Ö The structure of invoices needs to be changed in order to invoice electronically and enable compliance with IS-XML standards Ö ICH UG is where the e-invoicing, legal and financial management aspects will be discussed Ö The concept of Charge Category and Charge Code will be explained more fully (remember: more than 80, each with their own mandatory field contents) Ö The changes to UATP processing will be covered there SIS P 3 – Materials – RA 44 Plenary 12 September 2010

Principles of the Charging Model Ö Cover costs – SIS will be run as a revenue-neutral service – which means no profits but also no losses Ö Fair and transparent to the end users – possible for IS users to calculate costs in advance; no surprises Ö 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 P 3 – Materials – RA 44 Plenary 13 September 2010

SIS Fee Components Component ICH Member ICH Web Fees Same as today ($1, 500 annually) ICH Web/SIS Migration Surcharge Dependent on type of member and # of invoices processed ($4, 000 – $22, 000 annually) Declines over time as Transaction Fees build up IS Annual Fee Dependent on type of member ($1, 000 - $4, 500 annually) Transaction Fees Per transaction dependent on previous years history. Additional 25% if entered through the IS-Web (Invoice, Coupon, AWB, supporting document kb, etc. ) SIS P 3 – Materials – RA 44 Plenary 14 September 2010

SIS Fee Timing Ö After SIS go-live Ö Before you sign-up Ö After you sign-up Ö Before full migration ICH-WEB Fee SIS Migration Surcharge Transaction Fees Ö After full migration* Ö Through eternity Transaction Fees IS Annual 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) SIS P 3 – Materials – RA 44 Plenary 15 September 2010

Governance Ö Two new permanent bodies to be proposed to the Financial Committee, with new Terms of Reference Ö SIS SC to be responsible for the oversight of the service, the funding, and the prioritisation of changes and enhancements Ö 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 Ö 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 Ö Made up of 10 airline and 2 non-airline users of the IS service SIS P 3 – Materials – RA 44 Plenary 16 September 2010

IS Participation Agreement Ö Ö Ö 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 Ö Ö 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 SIS P 3 – Materials – RA 44 Plenary 17 September 2010

What this means for you 2011 2013 Sept Apr ~19 months Go-live Mandate Assuming you have at least one partner that is an early adopter… Ö Go-live is P 1 of September 2011 Ö You will begin to receive billings through IS, but you still receive the paper… Ö Expected IS mandate is April 2013 SIS P 3 – Materials – RA 44 Plenary 18 September 2010

Sept 2011 – 2 nd and 3 rd RMs via SIS 2011 2013 Sept Apr Go-live, RMs You received an RM via IS and wish to reject (or initiate/continue correspondence) Ö As per Revenue Accounting Manual rules, you must continue all rejections and correspondence via IS Ö Some of your partners are likely to migrate rejections and correspondence as quickly as possible Ö If you haven’t migrated these types yet, you’ll need to log into IS-WEB and create the billing online SIS P 3 – Materials – RA 44 Plenary 19 September 2010

Dec 2011 – No longer receive all paper 2011 Sept 2013 3 months Go-live, RMs Dec Apr No More Paper Your partner migrated some billing types (e. g. Pax primes) to IS 3 months ago Ö A billing carrier can stop sending paper copies of invoices they’ve been sending through IS for at least 3 months Ö 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) Ö Otherwise, you will see only the claim in the ICH F 3 – no invoice as you know it today SIS P 3 – Materials – RA 44 Plenary 20 September 2010

Sept 2012 – IDEC service discontinued 2011 Sept 2013 3 months Go-live, RMs Dec Apr Sept 9 months No More Paper IDEC discontinued The “old” IDEC service is discontinued Ö 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. Ö 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 SIS P 3 – Materials – RA 44 Plenary 21 September 2010

Apr 2013 – No direct ICH/ACH claims 2011 Sept 2013 3 months Go-live, RMs Dec Sept 9 months No More Paper Apr 7 months IDEC discontinued Mandate Usage of Integrated Settlement is mandated Ö ICH WEB and ACH recap sheet service will be disconnected for claims submission Ö All claims must be submitted via IS and must include all relevant billing info Ö All your partners will be fully migrated by now – every incoming billing will be via IS * The mandate is an estimate; the exact date will depend on acceptance of the solution, sufficient volumes, and approval by the responsible committees. SIS P 3 – Materials – RA 44 Plenary 22 September 2010

An operation needs staff… Ö SIS Operations Manager Ö Significant management experience of interline billing Ö Understanding of all Clearing House processes Ö Ability to lead change in the industry Ö SIS Operations staff Ö Ö 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 Ö If you are interested, or know someone who is, CV/biodata to Coote. N@iata. org SIS P 3 – Materials – RA 44 Plenary 23 September 2010

Final word Ö Ö Ö Ö 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! SIS P 3 – Materials – RA 44 Plenary 24 September 2010

Thank you. Email: sis@iata. org SIS Website: www. iata. org/sis SIS P 3 – Materials – RA 44 Plenary 25 September 2008 2010