One of the main objectives of ONE Order is to simplify business processes and reduce the costs for airlines, which will also have a great impact on the revenue accounting area.
The Accounting Centre of China Aviation (ACCA), in partnership with Singapore Airlines, its low-cost carrier subsidiary Scoot, Amadeus, and Navitaire piloted the ONE Order end-to-end workflow in production with real passengers during 2019-2020.
Based on the experience gained from this pilot project, ACCA collaborated with Scoot to explore LCC Order accounting using the ONE Order concept and found some similarities between LCC accounting and ONE Order accounting.
Similar to ONE Order, LCC order applies a three-layer structure. Compared with a two-layer structure (ticket/coupon), the three-layer structure provides flexible scalability to contain richer information, making it possible to use one order to cover all kinds of services instead of using multiple Electronic Tickets (ET) & Electronic Miscellaneous Documents (EMD) respectively.
For both ONE Order and LCC order, once an order is created, regardless if the order details have changed or not, the order ID remains unchanged in its life cycle. While in the ticket world, whenever a change happens to a ticket, a new ticket will be issued (i.e., reissue or exchange). In this scenario, where the original ticket number and the reissued ticket number are different, we need to connect such related tickets together and apply a complex reissue ticket comparison and calculation logic to get gain & loss during revenue accounting processing. Since the Order ID does not change, it will simplify this process when changes happen to order contents.
Although detailed accounting specification on ONE Order change has not been finalized, from our experience on LCC order accounting, this part could be the most complex point because to correctly identify ‘order change’ it is crucial to the accuracy of the forward sales amount and flown revenue recognition. Each time an order has a change, either the Order Management System (OMS) or the accounting system needs to identify whether the change has impacts on accounting or not.
It is common that when a passenger purchases a ticket, the ticket and its related order are combined. For example, a passenger could purchase a ticket from a GDS channel and then later modify the order through a hybrid carrier’s order channel. In this scenario, revenue accounting processing needs to link the ticket and the relevant order, make a necessary comparison to identify the gap and combine both for accounting.
During the ONE Order transition period, both current ticket system and ONE Order system will coexist for a while. In this transition period, it is possible that a passenger buys a ticket from a traditional channel then makes some changes in the airline Order channel, which is similar to today’s hybrid carrier’s business. Therefore, hybrid carrier’s accounting solution on ticket/order combination might shed some light for future ONE Order transition.
ACCA collaborated with Scoot and developed the LCC revenue accounting system using the ONE Order concept. The system went live in June 2024. The post-cutover practice proved that order-based revenue accounting is significantly simplified in both business complexity and system performance compared to traditional ticket-based revenue accounting.
Below is the actual comparison of revenue accounting efficiency between a LCC (annual passenger volume is about 13 million) and a full-service carrier (annual passenger volume is about 28 million), both are within the same airline group and using ACCA’s passenger revenue accounting system.
|
Indicator |
Order based LCC |
Ticket based FSC |
|
Annual PAX volume |
13 million |
28 million |
|
End-to-end system processing time for 1 month’s revenue accounting data |
Less than 7 days |
More than 20 days |
|
Number of airlines’ revenue accounting staff required |
5-6 staff |
Over 90 staff |
From the above figure, we find a significant advantage of order-based accounting on efficiency. As the core nature of ONE Order and LCC order is quite similar, we foresee airlines will invest less manpower in revenue accounting when ONE Order is fully applied.
*Find out more about ACCA's engagement in the IATA's Strategic Partnership Program on the partners directory.
