Simplified Interline Settlement A fundamental change…

1. Simplified Interline SettlementA fundamental change… SIS Awareness Regional Workshop – Nairobi, May 2011 Bernard PAUL, SIS Program Manager, IATA

2. SIS is theproject…. • Board of Governors, IATA Top management • IATA people and money • IATA StB mobilisation • Workshops globally

3. Why SIS is important? • Hitting the core of the process: paper • Changing the way industry works

4. Any organization, not only airlines

5. Not just an IT project • Business re-engineering • Re-think global processes

6. Spread the messagein your organization • Service providers • Invoice creators • Finance team • Treasury

7. Big, industry wide, global • IATA: $millions, 4 years, 20 people • 400 Airlines • 80 industry suppliers • +5,000 people $ +700 mSAVINGS

8. 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 • 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

9. 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

10. 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

11. 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

12. 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 timesthe number of invoices through SIS than the smallest; their SIS fees cannot be proportional

13. SIS Fee Components NOTE: All fees subject to refinement based on further evaluation of likely throughputs

14. SIS Fee Timing * “Full migration” means that you no longer submit claims outside of SIS (via the ICH-WEB)

15. The timer is running • SIS goes live in a few months from now • Initial feedback is that over 25% of members will migrate in 2011 itself • That means that members doing business with them also have to be prepared

16. 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

17. Questions? We’d be glad to address all your questions through the SIS Forums. Register for an account at: www.iata.org/SISForum Thank you.