FIRST & FINAL INTERLINE BILLING

This is a new interline billing concept, developed jointly by ATPCO, IATA, and ARC (AIA) for the benefit of the industry as a whole.

The basic objective is to end the cycle of billing, evaluation, rejection, re-evaluation, re-rejection, and finally interline settlement correspondence. The current process is wasteful and time-consuming, and costs airlines substantial amounts of money.

An industry review suggested that eliminating current processes would save the industry collectively hundreds of millions of dollars, and so IATA was tasked to identify the best way to achieve this. In doing so, a number of committees evaluated various systems, options and proposals, and finally arrived at the necessary Business Standards for both First & Final Billing and Neutral Fare Proration (NFP).

The basic processes are outlined below:

A full service description (20 pages) is available from the providers, who market the service jointly under the AIA name.

Briefly, the service allows for interline sales records to be sent for proration to one of the two agreed Neutral Fare Proration engines, ATPCO CIPS or Kale APEX, where proration is applied using an industry-agreed common set of rules. These incorporate a large number of SPA options, which should meet most airlines requirements without further support. Furthermore, the taxes applicable are validated against the IATA revenue accounting tax database (RATD) to ensure that the correct taxes have been applied. The prorated results are stored on the COMPASS database managed by ARC, with copies to both selling and billing airlines as required. When the billing airline carries the passenger, the NFP result is inserted into the bill, and sent to IDEC. The billed carrier receives a validated IDEC file, guaranteeing that the billed value is the same as that from the original calculation, after allowing for any changes in exchange rates. Under these conditions, using the industry-agreed proration methodology, no rejection process exists or is required. On the other hand, if the value is not matched by the service, it is flagged to the receiving airline so that action can be taken with the originator.

Beyond this, there are many options available to the airlines. While it is necessary to have at least one partner, consenting airlines can agree between them just what types of transactions are to be part of First & Final Billing. The Pre-proration Filter allows airlines to include or exclude tickets based on many different criteria, such as routes, fare types, sales locations or areas, ticketing system, and so on. The details of the inclusions or exclusions can be updated as and when required.

Airlines may choose to participate in Post-sales Processing, whereby a corrected prorate result is delivered to the billing carrier after a change has taken place since the original sale. This saves considerable manual effort by allowing re-proration to be fully automated.

The Pre-IDEC Filter checks that all billed values (for fare, taxes and ISC) correspond with those stored on the ARC COMPASS database, and flags any discrepancy to the receiving airline.

While the process will ultimately replace the current Interline Sample Billing process, in the interim it can be operated in conjunction with Sampling, by improving the accuracy of provisional billing, and reducing operator workload. Greater accuracy across the universe should also allow sample sizes to be reduced as the service develops and more carriers start to use it.

The process allows airlines to participate in the service with confidence, knowing that common prorate calculations have been consistently applied, whichever engine is chosen, and to gain from improved cash-flow and reduced costs in revenue accounting.

Further details are available from ATPCO, IATA and ARC. We support this initiative as being an important development in Interline Billing, and are happy to assist airlines wishing to know more about the service, or wishing to implement it in their company. At present, 19 airlines around the world, representing more than 50% of all interline billings, are switching to First & Final Billing.

A spreadsheet to assist airlines with their analysis is available from our downloads page.