Close The Revenue - Leakage Floodgates

New Back-Office Services Significantly Improve Revenue-Accounting Processes

When migrating from one reservations system to another, often the primary focal point is on customer-facing processes rather than the bigger picture, which includes back-office areas such as revenue accounting. Ultimately, this oversight leads to revenue leakage. However, new services are now available that improve back-office processes and reduce unnecessary revenue losses.

By Eddie Cash I Ascend Contributor

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Close The Revenue - Leakage Floodgates

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etaphorically speaking, migrating from one airline reservations system to another falls somewhere between performing a heart transplant and plan-

ning a wedding reception for more than 100 guests. Addressing technical aspects, restoring interfaces and conducting a post-migration “health check” can be likened to the heart surgery, while trying to remember all the many details is like planning a wed-ding reception. Most airlines do this only once in their lifespan … or so they hope.

Not surprisingly, the primary focus is on frontline, customer-facing business process-es at the airports, call centers and airline websites. In most cases, the impacts to rev-enue accounting are “minimized” with false beliefs and assumptions that somehow, revenue accounting staff will “figure it out” or “take care of” unusual circumstances like flights that are not closed or reconciled properly, electronic tickets that are checked in as paper, and improper ticket exchanges or refund processing.

Having performed numerous migrations during the past 15 years, Sabre Airline Solutions® understands that newly migrated carriers need more guidance in the back-office areas, especially revenue accounting. As such, it is essential for airlines to fully comprehend the revenue-accounting capa-bilities of SabreSonic® Customer Sales & Service (SabreSonic CSS), especially: Electronic ticket validation, business-

rules enforcement and overrides; The vast revenue accounting data and

insights.Consultants for the SabreSonic CSS

delivery and implementation process spend significant time with each carrier, recom-mending and planning best practices for SabreSonic CSS across a wide array of reservations, ticketing, and airport trans-actions and scenarios. Although there is intense focus on the financial integrity and revenue-accounting implications of these transactions, user frustrations arise when: They don’t understand data flows and

system relationships between SabreSonic CSS and the revenue-accounting system,

Third-party revenue-accounting providers are unable/unprepared to accommodate SabreSonic CSS data formats,

They cannot confidently calculate earned and unearned revenue,

They cannot confidently close their books for the accounting period.

Introducing Financial-Close And Reporting Services

Late last year, Sabre Airline Solutions introduced financial-close and reporting services as part of the standard SabreSonic

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Back-Office Services Improve Revenue-Accounting Processes As part of its post-system migration process, Sabre Airline Solutions offers services that improve back-office processes and reduce unnecessary revenue losses. Philippine Airlines was the first to take advantage of the new offering, followed by Virgin Australia and Etihad Airways.

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CSS migration process, with several objec-tives including: Assist newly migrated carriers with their

first, two month-end financial closes after the migration,

Provide accounting interpretation of SabreSonic CSS transactions and the many data sources,

Build client confidence in their earned and unearned revenue numbers,

Develop client self-sufficiency in repeat-ing the steps and analysis required to arrive at their earned and unearned rev-enue numbers,

Ensure analysts have a sufficient under-standing of the reservations and ticket-ing-data flows and system relationships among all sales channels, intermediaries (such as Bank Settlement Plan service providers), SabreSonic CSS, airport/day-of-departure transactions, and the reve-nue-accounting system.“The partnership we have with our

customers goes beyond the migration to SabreSonic CSS and the stabilization peri-od,” said Hugh Jones, president of Sabre Airlines Solutions. “We take extra steps to ensure that our airline customers have con-fidence in recognizing their post-migration revenue and can confidently complete their financial close.”

Last October, Philippine Airlines became the launch customer, followed by Virgin Australia in January and Etihad Airways in February. Sabre Airline Solutions empow-ered the finance and revenue-accounting

teams of the three airlines with several insights, tools and best practices to: Monitor/identify flights that have not been

closed properly, a step of vital importance to ensure flown flight coupons are marked as “used” and are then automatically passed to the revenue-accounting system to be recognized as earned revenue.

Identify and investigate root causes of elec-tronic tickets that are checked in as paper — the “TktEdit” problem. As a result, flight coupons cannot automatically be marked as “used” without unplanned manual interven-tion.

Monitor manual coupon status changes from “final” back to “open/OK.” Some airlines experience fraud and abuse when this process is not carefully controlled via specific keyword authorization.

Perform a “clean sweep” of the Sabre® tick-eting data warehouse to identify all air and electronic miscellaneous document cou-pons expected but not yet in “used” status.

Monitor/identify by selling station, agent sales reports not closed in a timely manner, which results in a delay in sales reporting and unearned revenue calculation for the balance sheet.

Perform sales reconciliation between the revenue-accounting system and SabreSonic CSS, with discrepancy drill down to the indi-vidual station or agent.

Quantifying The Value Numerically, the above value propositions

translate into:

Reduction of non-post departure closed flights from as many as 20 per day during the first week to zero per day by the third week.

Decrease of the “Tkt Edit” problem from 300 per day to less than 100 per day by using the financial-close and reporting prac-tice and partnering with the airport opera-tions team to drive rapid behavior changes.

Identification of more than 10,000 mis-handled flown coupons during the first week after cutover, enabling timely revenue rec-ognition instead of the traditional revenue-recognition process that was spread over 12 months.

Identification of thousands of interline-flown coupons that might never have been billed, resulting in permanent revenue leakage.

More Benefits To ComeFuture services, which will be added this

year, include interline receivables tracking. When an airline transports passengers on another carrier’s ticket stock, an invoice must be generated to collect payment. In the initial days after migration, agents may inadvertently fail to generate an invoice, resulting in the unpleasant prospect of the carrier ultimately flying a passenger for free.

The transporting carrier is responsible for initiating interline billing and tracking pay-ment receipt. Without close attention, these types of tickets are vulnerable to re-use by the issuing party, resulting in a permanent loss of revenue. To limit this revenue leak-age, the financial-close practice will be expanded to include validation of interline billings to other carriers.

While back-office areas such as revenue accounting can easily become lost in the throes of a system migration, the new financial-close and reporting services will enable airlines to focus on these areas as well and subsequently close the revenue-leakage floodgates. a

Eddie Cash is a manager of SabreSonic CSS financial close and reporting for

Sabre Airline Solutions. He can be contacted at eddie.cash@sabre.com.

Confidence In Flown/Earned Revenue To ensure airlines achieve maximum results following a system migration, Sabre Airline Solutions has developed a four-step process that helps airlines arrive at flown/earned revenue. Sabre Airline Solutions experts work with airlines, repeating and analyzing these steps, until the airline is confident about the process and able to attain an optimal outcome.