Today a large airline may take in over two or three million dollars a day and spend most of it. In fact so much money flows into the many company bank accounts that it is not unusual for an officer to be responsible only for transferring the extra cash daily from one bank to another to earn as much interest as possible. An airline may maintain one or more bank accounts in every city it serves. Few people are aware of what the finance department does, although it is one of the most important and complex divisions of any airline.
Not everyone is attracted to a career in finance, and this may be a department you have not considered. You may not like the idea of working with figures all your life and may have little aptitude for them. If this is your honest and accurate opinion, by all means consider other types of work. However, may we suggest that you at least keep an open mind and read this chapter, if for no other reason than to have an idea of what an airline finance department does? The world of finance-be it with a bank, the government, a corporation, a college, or any other large organization-can be quite fascinating and rewarding.
Although the functions of the various sections of an airline finance department vary greatly and bear little resemblance to each other, the entry jobs and many of the skills required at all levels for each section are similar.
Accountants, accounting clerks, bookkeepers, filing clerks, lawyers, managers, secretaries, and typists are the principal job titles you will find in a finance department. The challenge and interest come from the fact that regardless of your starting position, as you earn promotion your work will probably become more and more specialized. Thus you might start as an accountant, a bookkeeper, or a clerk doing routine work, and end up as a specialist in budgets, the tax department, a pension consultant, or a supervisor in any one of the other sections.
As you will see, the work of a finance department is not necessarily just statistical reports, balance sheets, or profit and loss statements. In some companies the finance division may also be concerned with insurance, tax administration, and budgets if these functions do not fit into other areas of the organization.
Rather than repeat the job duties in each of the various sections, we will give a quick overview of what the people in this department do. This will enable you to see the breadth of opportunity that exists here, and if a career in finance interests you, permit you to visualize where you might fit in this part of the airline business.
REVENUE ACCOUNTING AND DISBURSEMENTS
Perhaps the two most important sections of a finance department are those that receive and spend the money: revenue accounting and disbursements. To give you an idea of where the money comes from in a typical large airline and what the revenue accounting section does, here are the principal sources from which the large amounts of cash come, seven days a week, fifty-two weeks a year:
- More than hundred and fifty ticket offices, and as many airport freight depots and ticket offices.
- Thousands of travel agents.
- Every other airline in the United States and throughout the world.
- Freight forwarders who pick up and ship freight.
- Finance companies that issue credit cards used to purchase airline tickets.
- The United States Post Office and other carriers that contract with airlines to fly much of the mail and other packages.
A passenger may buy a ticket on Airline A for a flight from New York to Chicago but for some reason, decide to fly on Airline B, which honors the ticket. This means that although Airline A received the money for the ticket, once Airline B has flown the passenger it must collect the fare from Airline A. This calls for a special procedure that is routine between airlines but nevertheless must be checked and accounted for by revenue accounting.
It is also common for an airline to book a passenger for a trip that will involve passage over its own routes as well as routes of one or more other airlines. The airline that prepares the ticket collects all the money from the passenger and then must arrange to pay the other airlines for their portions of the trip. Every day millions of dollars are exchanged between airlines because many tickets are sold in this manner. To make the task easier, the airlines operate a clearinghouse that transfers the money and notifies the airlines of the amounts due them from each such transaction.
There is no such clearinghouse to help the disbursements section, which is responsible for paying all the bills that have been authorized by numerous employees as well as the purchasing department. Hundreds of checks may be prepared each day as a huge amount of paperwork is processed. Thus some employees are busy just receiving the payment requests (also called vouchers) and putting them in order to give to other employees. These people will make sure that each request has the proper approvals and does not exceed the dollar amount allowed for its category. (Company regulations usually show the maximum amount each level of management may approve for spending.) Another group of clerks checks the discounts and does the necessary statistical work to determine the final amount to be paid, whereupon the checks must go through a check-writing machine that imprints the amount on each. Finally each of the vouchers containing a carbon copy of the check and other papers must be stapled together and filed. At the same time a list of payments must be prepared and coded so that the general accounting office will know where to charge each check drawn.
GENERAL ACCOUNTING
Someone has to put together the records of all money received and spent and keep track of cash on hand. The general accounting section does this. The comprehensive records that these accountants maintain are the basis for the profit and loss statement, all types of expense reports, departmental budgets, income tax returns, and other reports that must be filed with various government agencies by this section.
PAYROLL
The payroll section issues all payroll checks-a big order, especially if there are many thousands of employees. Dates when employees are paid must be staggered so that the work is spread out over the month. Although most checks are prepared by computer, again it is the human being who must instruct the computer regarding the individual amounts, after figuring the various deductions for each employee. As if this were not enough work, there are always those employees who lose their checks and need duplicates, those going on vacation who request salary advances, those who are dismissed suddenly and must be given the money due them, and any temporary workers who may be on the payroll for only short periods of time.
Some companies offer a 1 or 2 percent discount if the bill is paid within ten days.
The work of the four sections described above is essentially of a routine accounting nature, which can have a real fascination for those with statistical or accounting interests. The responsibilities of the sections covered below are quite specialized and not strictly of an accounting nature (although bookkeeping and accounting are essential in each), and could prove extremely rewarding if you were to make one of them your career.
