Once a sought after and profitable business, the airline sector is now one of the most complicated, competitive, and vulnerable businesses in the world. Plagued by rising fuel prices, tougher security laws, and a dynamic global economy, several airlines have seen a drop in profits forcing them to work hard to operate within parameters of costs and budgets. Low cost airlines have also disrupted the market with their variable and flexible operating models. Given this scenario, airlines must engage in innovative measures to stay profitable. One key tool for this overhaul is to outsource non-core processes. This will result in major cost-cutting and allow them to leverage their scale and systems.
With major reformatory changes across the airline industry, almost all functions in an airline have revamped lately. Some of the areas, predominantly regarded as back-office tasks have gained huge importance in the day-to-day functioning of an airline. Revenue accounting is one such function that has gained tremendous importance in the way commercial/sales department of an airline takes decisions. The decisions of the airlines are fueled primarily by the latest enhancements that have taken place in this area of business
Revenue Accounting, an important business function for airline, has a major impact on revenue generation and also on profitability. The revenue accounting systems today have become highly robust by accounting the worldwide sales of an airline and by delivering data-analytics with the help of new analytical tools, developed/adopted by the system providers.
There was a time when this information was not readily available to the decision makers, but now they risk being flooded with data that accumulates on their desks. This has been possible due to the advancement in the revenue accounting and related systems; where departments of an airline are benefitted with the information available on a real-time basis
Today, revenue accounting systems have become so dynamic that they not only provide relevant, real-time information, but also provide minute details required to check the performance of a single route, on a single day. This information facilitates the decision makers to make adjustments in decisions on fares, Reservation Booking Designators (RBD), schedule, and type of aircrafts used on a particular route, as compared to how it was handled in the past.
This paper lists the revenue accounting providers, the features of the solution they provide, and ways of selecting the right revenue accounting system.
The Revenue Accounting function has changed manifold as compared to what it was decades ago. With a lot of initiatives from IATA and group airlines, the focus has been to make the overall process electronic. While projects like eTicketing and Simplified Interline Settlement (SIS) have changed the job of a revenue accountant from real accounting to monitoring the activities/behavior of the system in use, the demand of the fast-evolving global travel market has made the business of airline revenue accounting even more complex. There is tremendous pressure to record, monitor, analyze, and collect all types of revenues as soon as possible. Thus, it becomes imperative for airlines to streamline revenue accounting functions and develop a highly effective solution.
As a reaction to these new initiatives and to keep pace with the new and upcoming changes like premium economy class, new version of DISH 22.0, NDC, One-order in the industry, revenue accounting system providers have come far compared to the vision they were initially built on. However, the thought process of adopting these changes has been different for different providers. While some of them continue to modify their existing codes, others have taken a stand to build next-generation revenue accounting systems that not only perform accounting but also provide in-built analytical tools along with several other value-adds. Some of the vendors have already started understanding the value of an integrated solution and have embarked on projects that leverage new technologies to shift their old platforms and make them more robust. The possibilities of succeeding in the market for such vendors are much higher as compared to the new entrants since revenue accounting is a heavily domain-led function of an airline.
Traditionally, the market for revenue accounting system providers has been segregated based on their geographical locations. While some airlines in Asia-Pacific stick to their in-house solutions, others have migrated to Revera by Accelya Holding. Most of the airlines in the Middle East use RAPID from Mercator and MonaLisa from Coforge in Europe, while Amadeus/SIRAX by LRS enjoys a bigger customer base in Europe, the Middle East, and African markets.
However, this trend has started changing lately, primarily after the 100% e-Ticketing initiative launched by IATA, which has changed the overall picture of how revenue accounting processes are managed in an airline.
Post-e-Ticketing, IATA has launched several new initiatives that have given these providers possibilities to prove their strengths. In the bargain, some of the niche providers like Accelya Holdings, Coforge, Mercator have gained significant market share, whereas big airline system players like SIRAX and Amadeus have gained momentum with bigger airlines.
The latest edition of Integrated Reporting and Data Analytics within the revenue accounting system has gained a lot of importance. A lot of emphasis has also been given to making the revenue accounting systems real-time and reducing the time gap between sales and recording of any transaction that helps airlines in making real-time, informed decisions. Revenue accounting data are keys for making decisions but are normally transmitted in a raw format to some other systems. However, with the evolution of next-generation revenue accounting systems, this data can now be easily presented, transmitted, and reproduced at any stage with very less effort. The new Business Intelligence tools help airlines in creating their own reports without any help/assistance, help users to dig deep into data without getting lost, measure the necessary KPIs for decision making, and assist in forecasting.
Coforge’, a leading vendor in the Airline Passenger Revenue Accounting systems with more than 35+ airlines, Intellectual Property MonaLisa is an efficient, flexible, user-friendly, and future oriented system. Other than full service airline, Coforge has signed one of the biggest low cost airlines as their launch client in the low cost airline market.
MonaLisa is a solution to various accounting problems that an airline faces. MonaLisa meets the demanding requirements of any airline and uses latest technology to improves processes and minimize human intervention. It is a state-of-the art, easily customizable Passenger Revenue Accounting solution that can automate the complex accounting process and generate actionable intelligence. MonaLisa is a highly productive, real-time application with full integration of different passenger service system feeds.
The fundamental principle of MonaLisa is whenever monetary transactions takes place, every Ticket/EMD/Voucher has to be accounted for completeness and accuracy. This process depicts the real picture of the airline’s revenue at any given point in time. It provides tracking and workflow tools that can deal with the complex revenue accounting environments. It monitors the complete life cycle of documents such as tickets, coupons, EMD etc. The various functions like sales, audit, online and interline receivable/payable, exchange and refunds proration, uplift registration, outward/inward interline billing, financial accounting and MIS reporting are monitored. It also offers direct customer invoicing, credit card invoicing and reconciliation, codeshare billing, and interline and sales audit, ensuring that the airline is always in control.
Revenue accounting incorporates unrivaled, advanced online reporting facilities, first-class drill-down, slice-and-dice and comparative capabilities with the objective of maximizing revenue. Airlines typically manage data reporting and analytics with revenue management solutions. Many of these solutions integrate with the core revenue accounting systems while some, mostly the newer ones, are in-built solutions easier to use as well as maintain.
Some of the key features offered by these solutions are:
Turbulent economic environments are forcing airlines to find innovative ways to retain their competitiveness. Accurate and timely recognition of revenue and availability of relevant, reliable, and actionable MIS are fundamental pre-requisites for any airline to proactively design competitive strategies. Consequently, the Revenue Accounting role is not just accounting but also revenue protection and decision support.
Airlines around the world have to operate on tight schedules with an eye for accuracy for detail, where every activity is crucial and critical to run the business successfully. As they are heavily technology-driven, they need to ensure they are using the right vendor and the right system to achieve predefined targets. It is imperative for airlines to choose the right partner—airline business is dependent on partnerships in different operational functions.
Lately, most of the airlines have been maintaining a vendor pool to find the right partner and like any other industry get inquiries, calls, and proposals from several vendors in various areas of operations on a daily basis. With so many options available, it may become challenging for the airline to make the most accurate decision. Industry governed systems such as revenue accounting also get highly customized to the airline’s need over a period of time. It becomes difficult, as well as risky for the airline to make an easy change of system. PRA operations remain a non-core process for an airline but the information coming out is critical for the functioning of the system.
While making a choice out of so many options available in the market, an airline must focus on the following items:
Coforge leverages industry knowledge, financial data, and application development expertise to provide a platform that manages the airline’s long and short-term strategy. MonaLisa ensures that financial and non-financial measures are aligned and management decisions promote strategy realization.
Streamlining Operations for Easier Decision Making
In recent times, most airlines are plagued with huge fixed costs and bankruptcies. The airline industry is witnessing significant challenges with profitability being directly impacted by the current economic recessionary conditions, changes in fuel prices, and stiff competition. Hence, it is imperative for the airlines to make decisions with regards to CAPEX/OPEX and a high level of agility to overcome these obstacles.
To summarize, revenue accounting systems add significant value to an airline’s day-to-day decision-making. With highly advanced tools available in the market, airlines should go for a long-term solution that not only meets their current requirements but also the challenges that the industry might face in the future. The chosen system must be capable of reducing possible revenue leakage possibilities, presenting timely and accurate reports to the higher management and bringing process improvements in the overall revenue accounting function of an airline.
The success of such an engagement depends on the experience and commitment of the technology partner that can lead to a long-term partnership between the two organizations. Hence, it is critical for an airline to perform a thorough due diligence before finalizing the partner with relevant experience, resources, scalability, well established processes, and data security. MonaLisa is a fully IATA-compliant product that meets the requirements of all sizes of airlines and with Coforge as your partner you can deliver on all parameters.