The hidden engine of airline profitability: getting settlement & order integrity right

Today’s article is about a piece of my writing that you can read free of charge on another website. I recently prepared a white paper for Accelya that I hope all readers interested in airline revenue will find interesting. It is called “The hidden engine of airline profitability: getting settlement & order integrity right” and can be downloaded at this address: https://w3.accelya.com/resources/whitepapers/the-hidden-engine-of-airline-profitability/ The paper is free to read but you will need to give your name and work e-mail to Accelya to receive a copy. The paper is written as a neutral shaping-the-conversation piece. Advertisement: During August I will be on holiday – instead of “sending a postcard” once in two or three weeks like last year there will be one article a week instead of the usual three through the whole month There are five parts in the Accelya paper. Parts One and Two examine the legacy institutions of airline sales and distribution prior to Modern Airline Retailing. Revenue Accounting and Revenue Integrity were developed to ensure accurate revenue allocation and trusted partner interactions. They became the data foundations required for pricing and Revenue Management. These institutions will continue to play a critical role as airlines transition to new models. Parts Three, Four and Five introduce payments, settlement and order integrity as the next generation of airline commercial institutions. These capabilities extend beyond traditional control functions, enabling real-time coordination, mutual benefits with partners and scalable retailing. Together they build on the legacy foundations to form the institutional backbone of Modern Airline Retailing, shaping how airlines capture revenue, manage risk and deliver profitability in the decade ahead. I also outline five “insight boxes” setting out things that airlines can bear in mind now as they shape their plans to make Modern Airline Retailing a reality. These are: Box one: Revenue Accounting is more than a back-office function, it is a core institution that underpins airline profitability today and will continue to do so under Modern Airline Retailing. It enables industry-wide trust, ensures accurate revenue allocation between partners, and provides the data foundation for pricing and Revenue Management. There are three implications for airline executives: 1. Revenue Accounting is not optional infrastructure but it is the system that ensures revenue is correctly captured, shared and audited across increasingly complex commercial relationships 2. Pricing and Revenue Management are only as effective as the data they are built on; inaccurate or delayed Revenue Accounting directly weakens forecasting and optimisation 3. As airlines move to Modern Airline Retailing, the need for accurate, timely and trusted revenue data increases, making Order Accounting more – not less – strategically important. Box two: Revenue Integrity is the trust framework that underpins airline commercial performance and will be expanded under Modern Airline Retailing. It ensures that bookings convert into revenue, aligns incentives between airlines and partners, and protects the integrity of demand data. Airline executives should consider three implications: 1. Revenue Integrity is not just a control function as it directly impacts revenue, forecast accuracy and inventory efficiency 2. Weak controls distort demand signals, dilute yield and increase the risk of unsold Inventory 3. In Modern Airline Retailing, Revenue Integrity must evolve into real-time, multi-party trust infrastructure spanning orders, payments and fulfilment. Box three: Payment orchestration is a core institution of Modern Airline Retailing, determining whether complex offers convert into revenue. Airline leaders should consider three points carefully: 1. Payment performance directly impacts conversion, customer experience and profitability 2. Increasing transaction complexity requires coordinated orchestration across multiple partners and systems 3. In a Modern Airline Retailing world, payment becomes a real-time capability that confirms commitment and enables fulfilment. Box four: Settlement ensures that revenue is realised and not just recorded across a complex, multi-party ecosystem. Three key points for airline leaders include: 1. As airlines become merchants of record, they take on greater responsibility for distributing funds accurately and on time, and bear the risk and costs of consumer chargebacks 2. Weak settlement processes create financial risk, partner friction and potential liquidity challenges 3. Real-time, transparent settlement capabilities will become a key enabler of scalable airline retailing. Box five: Order integrity ensures that what airlines sell, price and promise is delivered consistently across the retailing lifecycle. Airline leaders handling Modern Airline Retailing projects should bear these three points in mind: 1. Misalignment between offer, payment and fulfilment erodes customer trust and reduces repeat purchase behaviour 2. Increasing personalisation and bundling require stronger real-time coordination across systems and partners 3. Simple, transparent and reliable customer experiences supported by strong order integrity drive long-term retail success. If you choose to download and read the paper, I hope you enjoy it! Please also let me know if, having read it, you have any questions. This is the third of four white papers that I have prepared for Accelya. Stay tuned for the fourth and final one, which will be called “Delivering what you sell: the next frontier of airline retailing”. Meanwhile the first two are available here: Decoding Modern Retailing: A Practical Guide to Offer, Order, Settle, Deliver (OOSD) https://w3.accelya.com/resources/whitepapers/decoding-modern-airline-retailing-oosd-guide/ Lessons from Amazon: what great retail looks like in aviation: https://w3.accelya.com/resources/whitepapers/modern-airline-retailing-lessons-amazon/