Cost Monitoring Framework
- 1. Optimizing Operations Through Real-Time Direct Operating Costs Management Airline FRAMEWORK
- 2. The airline industry is a complex place, with multiple layers and hundreds of stakeholders including ancillary vendors, airport authorities, airline technology solutions, GDS integration and many more. Effective communication and timely sharing of information between these stakeholders impacts airline margins, efficiencies and profitability. Some areas where airlines constantly feel challenged to deliver: Increasing customer expectations It has become critical for airlines to consistently manage the customer expectations. Customer “on-demand” expectations means providing the right service at the right time under the right price point. Reduction in operating cost To increase profitability an airline needs to know the insights of its operations. Analyzing operations effectiveness, profitability of flight routes, capacity and inventory information and planning are some of the key questions being asked by airline executives. Fuel Prices The fluctuating global economy and fuel prices impact the airline profitability substantially. Higher fuel cost results in financial losses and can be optimized by knowing the correct route profitability.
- 3. The operating environment for airlines is highly complex due to the large number of flights, variation in aircraft types, multiple countries and earnings in various currencies. In addition to the above, it becomes difficult to calculate the actual operating cost for each flight in real-time due to: • Standard ERP systems which do not provide accrual of expenses on daily basis • Complex IATA based service parameters to be implemented for material management • Detailed cost calculations cannot be tracked according to IATA rules Managing Operations It is essential for an airline to have access to accurate real-time direct operating cost data to analyze profitable & non-profitable routes and activities.
- 4. Airline Cost Monitoring Framework Airline Cost Monitoring Framework is an integrated solution that automates end-to-end business processes to ensure smooth operations. It provides real-time data of the direct costs involved in flight operations and helps determine route profitability. Features IGT’s framework combines data from flight operations system (FOPS), revenue accounting, departure control and Business Intelligence and Analytics system to provide real-time, unified view of the route profitability. It also includes costs like crew, hotel, transport, web voucher etc. to provide 360 degree view of the real-time direct operating costs. Accurate cost reporting | Route/network result calculation Invoice verification | Fast ROI calculation | Budget forecasting Direct Operating Costs VSAT Charges NAFISAT Charges Communication Charges Ground Handling ChargesFuel Uplift Charges Landing Charges Lighting Charges Terminal Navigation Charges Parking Charges Overflying Fee Cost Monitoring Framework Real-Time Real-Time MASTER DATA CO NTRACTUAL DA TA FOPS DATA
- 5. Integration Modules Fuel The framework integrates fuel charges and helps accurately calculate and predict uplift and fuel consumption volumes along with related costs Airport & Ground Handling Charges It maintains contractual rates for airport services, handling charges and automates invoicing and accrual management Navigation Charges It captures data from navigational planning systems and automatically applies the latest navigation rates to calculate over- flight cost Integrated Contract Management Intelligently unifies and manages contractual data for smooth handling of budgetary estimates, invoice verification and forecasting Automated Invoice Control & Accruals Generation Electronically received invoices can be automatically verified against stored contractual rates Revenue Management Syatem The framework integrates with revenue systems to help determine route profitability on real-time basis Reports Various reports such as simulations, realistic forecasts and dynamic budgets based on real-time numbers can be easily generated Catering Charges Digitized in-flight inventory of F&B for insight into route cost, final consumption, passenger trends and data
- 6. Airline Cost Monitoring Framework: Automatic Cost Calculation Airline Cost Monitoring Framework calculates the value of cost components according to IATA regulations which is not possible in standard ERP where calculation/ postings are done manually. Real-Time Postings It provides real-time update of accruals which get cleared when the invoices are received. This improves the accuracy of liquidity forecast, cash flow reports & route profitability reports. Exception Error Handling Data errors caused due to any system or data issues are stored and updated in the framework after error rectification. Checks and Validations Checks and validations have been inserted in the framework to ensure correct cost calculations within the parameters defined in IATA and other business rules. a comprehensive route profitability solution
- 7. Get Faster and Accurate Profitability Reporting • Estimate & predict the profitability of the airline operations down to tail number • Any aspect of an operated flight can be reviewed for analysis, planning & decision-making Make Operations Management Simple Capture Hidden Costs • All charges get analysed including different noise charges, lighting charges, terminal navigation charges and VSAT charges Enable Efficient Budget Planning • Forecast the simulation of individual flight events • Create the most efficient and profitable route plan Get Faster ROI • Completely eradicate overbilling from suppliers • Create seamless creation of accurate accruals • Both cloud and on-premise deployment option available Achieve real-time data accuracy and profitability
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