This is an outline of generic passenger revenue accounting processes as used by many airline revenue accounting systems. It is intended only as a guideline to the principal processes, and does not represent any particular system, however it may be useful when considering possible revenue accounting system choices. Equally, out-sourced revenue accounting service providers are likely to have or need a similar system as the basis of their services. The modular structure of individual revenue accounting systems will vary, as will their coverage of the various processes within them.

The basic purpose of an airline revenue accounting system is to manage the control, reporting, use and accounting of tickets, MCOs, excess baggage tickets and other ‘accountable’ documents. In doing so, it should be accurate and flexible, and provide maximum efficiency in processing ticket data, and posting and billing accurate values. It should validate all transactions, and initiate recoveries where under-collections or errors have occurred. It should minimise opportunities for fraud, and identify circumstances in which a fraud may have taken place. It must deliver fast, accurate passenger revenue and segment data to management and management information systems.

This is the process that maintains details of the current status of accountable documents, from the time they leave the printer. It will require stock to be received by the head office or other distribution centre, and will allow each distribution centre to re-distribute to General Sales Agents, offices and agencies. A link to the sales reporting process will confirm whether the sales point is correctly reporting the sale, or whether there is an input error, or stock control error. Identification of the stockholder for a flown coupon for which no sale has been reported assists in attributing a temporary value to the coupon for management reporting, and enables the sales point to be chased should a sale not be reported within an acceptable time. A link to the ticket blacklist service will allow logging and reporting of missing or stolen stock.

This process identifies the reporting calendar for every sales point and BSP, whether manual or automated, in-house or agency. As sales reports are received, the calendar is updated to show it has arrived, and that processing has started. The calendar will highlight missing and overdue returns, and either send out chasers, or report to the user for further follow-up. Account postings may take place to record the value of the sales return.

This covers the capture of sales and refund reports, whether as manual returns, or as tape or file loads from BSPs and in-house ticketing systems. Each will be checked for errors and inconsistencies, such as bad data, out-of-sequence tickets and internal/batch total errors. Anything that will fail the next process input will be corrected here.

The system may well incorporate, or link to, an image database, allowing ticket records to be processed, stored and retrieved at will. This aids any validation, enhancement and correction activities in any process, which might otherwise require access to the paper ticket or to a printed facsimile.

Refunds and exchanges will be recorded, and the uplifted coupon data passed to the Uplifts process to be accounted for and cleared from the database.

Additionally TCN data for the airline’s sales may be received and processed to assist with valuation of flown coupons for which no sale has been reported. Data for other airline sales containing one of your own segments may also be stored, to allow for automated generation of billing values to that airline, or for use as part of the IATA First and Final Billing process.

This will check any discounts, commissions and over-rides claimed or deducted, and highlight any which require recovery action to take place. The generation of ADMs may take place here, or may be held in case other errors are discovered. Accounting adjustments will result.

This will look at the journey, the sales date, the travel dates, stopovers and so on to validate whether the correct fares and taxes have been shown on the ticket. Once again, errors outside of a given tolerance will require corrective action, and further accounting adjustments will be made to reflect the action taken.

The data passed from Sales Input will be prorated to obtain accurate values for fare, commissions and discounts at a coupon level, and individual values for each will be passed to the forward sales (UTR) account and other suspense accounts to be held until each coupon is used. The final data will be passed to a core database, where all the ticket’s details will be stored, and records of usage maintained. The proration module may be either an internal function of the sales evaluation process, a separate module or process, or external service provided by a third-party though upload and download of data and results.

This is like the sales register, except that it maintains a record of all flight schedules, and the number of days that the office is prepared to wait for the flight coupons or data before sending a chase. The register ensures that this data is received for every flight in the airline’s schedule, and that no flights have been lost or forgotten. As the flown coupon record is the airline’s principal source of actual revenue, it is critical that these are processed quickly and accurately.

This is principally the collection and input of coupons or coupon records for every passenger that has flown. The input may be in the form of electronic ticket records, data recovered from coupons by scanning machines, file transfers from departure control systems, or by manual capture of the data on the physical flight coupon. Tickets of other airlines are also recorded, and passed to the Outward Billing process for pricing and recovery from the selling airline. This process is also accessed from Sales Input to clear refunded and exchanged coupons from the database.

This process varies, depending on whether the system is ‘First-coupon-based’ or ‘Sales-based’. For a further description of these, see our overview of revenue accounting approaches. Briefly, in both a sales-based and first-coupon-based approach, if there are values for fare, commissions, discounts and taxes that have been through the sales process, these will be used for accounting. If there is no sales record available, the first-coupon-based system will require the capture of a dummy sales record, using the information on the flight coupon. This may or may not be used for accounting. The sales-based system will allocate a calculated value based on internal logic, equivalent historical data and other stored information, and this will be used for management reporting. The accounting will not take place until the sales record has been processed.

Basically, this process controls the reconciliation and accounting of the ticket. It flags coupons as used, whether flown, billed, refunded or exchanged, and clears the appropriate values for accounting. It also manages process controls such as duplicate usage checks, unreported sale checks, blacklist checks, out-dating of unused tickets and so on.

This process values any coupons issued by another airline, together with any taxes or Interline Service Charge (ISC) applicable, and creates the interline bill to recover the value from that airline. There is a formal structure of invoice documents (Forms 1, 2, 3, A, B, etc.). Bills can be sent as paper invoices, or as IDEC data files. Billing can be Non-sample (i.e. Each coupon is factually evaluated, ideally automatically using TCN data and a prorate module, but possibly by manual calculation), or Sample (i.e. A defined percentage of the total interline billing will be factually evaluated, and then ‘scaled-up’ to a value that represents the total volume of coupons). It can also be ‘First & Final’, a new approach which uses standard valuations for tickets based on Neutral Fare Proration (NFP), and for which there is no interline error or rejection process.

For non-sample interline billing each coupon valued is added to a bill in an industry standard format, and this is sent either directly to the other carrier or to an industry Clearing House.

For Sample interline billing, a provisional invoice is created, using preliminary valuations which are always automated. This is despatched as above.

For First & Final interline billing, the TCN record for the coupon will have an NFP value attached. This is used for billing without further validation or amendment. When the bill is despatched (using IDEC), the service confirms to the receiving airline that the correct prorate value has been used. The airline then accepts this billing without further checking.

If either of the other interline billing methods have been used, the outward bill may also incorporate any Rejections generated from the Inward Billing process.

This process starts with a register that notes the invoices that are expected, and logs them and their values when they arrive. This is necessary as the Clearing House process will have already deducted the value of the bill from the value of any outgoing invoices. In effect, it has already been paid, and the subsequent validations are to see whether any recovery is required.

The invoice itself is captured either manually, or by loading the IDEC file. In the case of non-sample, the system will then compare the incoming-billed values for fare, taxes and ISC with the data on the coupon database. If the billed values are the same as, or lower than, the stored values, the billing will be accepted, and adjusted account postings made. If the billed value is higher than the stored value, the item will be flagged for review and re-prorated. If the difference is not accepted, and the value is outside the pre-assigned tolerance level, a Rejection is initiated.

Equally, incoming interline billing rejects from the other airline need to be entered, reviewed, and either accepted or rejected a further time if there is still no agreement.

In the case of Sample, the system must select all coupons from the incoming invoice which match the sample digits published by IATA, and these must be factually evaluated with a high degree of accuracy. An adjustment is agreed with the other airline after a preliminary evaluation of the tickets (the process of Sampling is covered fully in the IATA Revenue Accounting Manual, section B1).

For a First & Final billing, the only check is that the incoming IDEC item does not have an error code against it, which indicates that the First and Final Billing Service has identified that the value has been manually amended, and can therefore be rejected if unacceptable.

This process is concerned with the maintenance of user identities and authorities, system security, back-ups, time and date initiated functions, posting consolidation and control, reference data tables and loads, and so on. Whatever the name applied, the functions must be available.

The system will supply a range of accounting and management information reports, and provide data feeds to other systems and departments as required, such as financial systems, MIS and EIS systems, revenue and yield management, sales management, and so on.

This simple overview may be of use for airlines to consider basic functionality options, but we are happy to advise on more detailed revenue accounting system requirements, functionality and design.