CHALLENGES IN REVENUE ACCOUNTING
As airlines evolve business models and distribution strategies, so the need to manage the accounting of increasingly complex revenue streams becomes more critical. Many LCC’s initial approach to revenue accounting is to simply take all sales as revenue at the time of sale, and use tools such as spreadsheets to support calculations and journal postings.
This approach may be sufficient in an environment where website sales, using credit card payments, represent the bulk of an airline’s revenue, and fare rules determine that fares are non-changeable, so the revenue is earned, regardless of whether the passenger travels or not.
However, as airlines introduce variations in fare rules, ancillaries, distribution and payment channels, or embark on interline or codeshare agreements, so the limitations of such a basic approach to revenue accounting become apparent.
With the potential for multiple streams of data to consider, together with more varied business rules and scenarios, so the demand for more detailed revenue accounting capabilities becomes paramount.
PROLOGIS has more than 15 years of consulting experience, working with airlines worldwide. Our consultants have detailed revenue accounting knowledge, gained from working with many different types of airlines, ranging from legacy / network carriers, through to start up LCC’s. We have provided support to our client airlines on a number of revenue accounting based projects in areas such as:
- System selection and project management of subsequent implementation
- Business process review
- Outsource solution implementation
- System enhancement to support the accounting and billing of ET’s
- Solution evaluation
Our team at PROLOGIS can guide you through the various approaches to revenue accounting that are available, based on your exact business requirements and resource capability. We can help you adapt your revenue accounting approach so that it matches the commercial strategy of the airline.
Areas for consideration may include:
- In source or Outsource – what approach works best for your airline?
- Business Process Review – we can work with you to ensure your current business processes deliver optimum results
- Refunds – Regardless of whether or not your airline allows refunds on fare products, it is likely that situations will arise where a credit back to your customer will be required, we can help you ensure that your refund strategy meets the financial needs of the airline balanced with the commercial needs of the customer
- System Selection – there are a range of revenue accounting solutions and products currently in the market place, PROLOGIS will work with you through the entire RFP process to ensure the selection of the best solution for your requirements
- Distribution and Payment channels – each different channel may have its own unique data feed, we can assist your IT support team to ensure that the maximum benefit is being realised from each data source.
- Codeshare and Interline – we can support you with implementing the relevant processes that are required to manage interline billings, either directly or via one of the industry clearing houses, with or without the use of E-Tickets
By implementing the correct revenue accounting solution, your airline can benefit from fast, accurate financial data. Multiple sales and payment channels can be reported correctly, and usage data can be matched with its corresponding sales activity.
In addition to the accounting functions that are the heart of a solution, your Revenue Accounting system can become a valuable data resource, supplying information that can support business critical decision making. From up to the minute dash boards, to detailed data analysis tools, the solutions that are currently available offer a wide range of ways to support your airline.
At PROLOGIS, we are committed to helping you realise the maximum benefit from your revenue accounting strategy, our project goal is to deliver sustainable and identifiable value to your airline’s profitability after completion of our project.
|CASE STUDY: SKYLEDGER REVENUE ACCOUNTING IMPLEMENTATION|
PROLOGIS recently provided project management and business consultancy support to a Middle Eastern regional carrier in respect of their implementation of Navitaire’s Skyledger Revenue Accounting system. Prior to this, the carrier relied entirely on spreadsheets to perform all revenue accounting activities. Read more
Do you have any questions or would you like more information?
We look forward to hearing from you!
Contact: Jürgen Krumtünger