E-invoicing in the Airline Industry
Recently, I was speaking with a colleague of mine who asked me “why are so many airlines are using iPayables? Is it because of specific features that the airlines use? Is it because of a federal mandate to use an American business? Is it because the founders of iPayables were all ex airline executives?” The answer, of course, was none of the above. But the real reason is fairly interesting.
The first airline to adopt iPayables was American Airlines in 2001. At the time and over the next few years, the industry was suffering from rising fuel costs, increased government regulation, passenger safety concerns and in general; decreased passenger revenue. If you have been around as long as I have, you might remember how strange it was flying in planes that were less than 40% full during that time.
To combat this, most Airlines mandated a heavy emphasis on cost and head count reduction in order to survive and become profitable again. Inefficient processes in AP was one area of concern for carriers who were looking to streamline their business model. As an example, most of the airline’s AP Departments tended to pay their suppliers only after the invoice was fully approved by everyone and their dog, which usually took an absurdly long time (usually over a month)! On top of that, those departments needed dozens and dozens of people to process, verify and audit mountains of paper invoices.
It’s no wonder that when American Airlines first discovered iPayables at an industry conference way back then, and contemplated the ridiculously positive financial and efficiency impact it would have, for them it was a revelation! Even though electronic invoicing was at that time, in its infancy (iPayables was one of the early pioneers) many other airlines and even the International Air Transport Authority almost immediately, got on-board and the solution really took off!
Unfortunately, even though most of the major airlines have adopted iPayables as their AP Automation solution, others have been reluctant. Interestingly enough, there was at least one airline who had deep and detailed conversations with us about how our application works and about the possibility of adopting us. They then used the information gathered from us and attempted to build their own E-invoicing platform. Needless to say it did not go as well as they hoped, and they are no longer around.
Another airline decided to go in a different direction. They wanted a more European feel and went with one of our competitors across the pond. Eventually, that company got bought by a larger American company shortly, which you would think would be the end of the story.
However, that bigger American company decided to sunset (kill) the old invoicing product they were using and try to replace it with their solution which is even more overpriced and less functional.
The story takes another turn as that company recently got bought out by another American company and it is probable that they will turn to us for their AP Automation needs. It’s kind of funny how things come around! With all of that said, I told my colleague how lucky we were to find those airlines when we did and have been able to cultivate partnerships that have endured and been profitable for all parties involved. Currently we serve more than 2/3rds of the world’s major airlines which represents about 25% of our revenue. We appreciate them and they have enjoyed partnering with us.
He was pleased with my answer and asked if any additional airlines were coming on board for which I answered that I am confident we are about to close another major US carrier shortly, but that’s another story.