Singapore Airlines 2009 Annual Report Download - page 119
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117
3 Signifi cant Accounting Estimates (continued)
(iv) Frequent fl yer programme
The Company operates a frequent fl yer programme called “KrisFlyer” that provides travel awards to
programme members based on accumulated mileage. A portion of passenger revenue attributable to
the award of frequent fl yer benefi ts is deferred until they are utilised. The deferment of the revenue
is estimated based on historical trends of breakage and redemption, which is then used to project the
expected utilisation of these benefi ts. Any remaining unutilised benefi ts are recognised as revenue
upon expiry. The carrying amount of the Group’s and the Company’s deferred revenue at 31 March
2009 was $500.8 million (2008: $435.7 million).
(v) Aircraft maintenance and overhaul expenditure under power-by-hour agreements
The Group has entered into several power-by-hour (“PBH”) engine maintenance agreements with engine
original equipment manufacturers. The monthly payments are based on the number of fl ying hours
fl own. A portion of the cost is expensed at a fi xed rate per hour during the term of the PBH agreement.
The remaining payments made are recorded as an advance payment, to the extent that it is to be
utilised through future maintenance activities, if any, or capitalised upon completion of an overhaul.
The proportion of the amount to be expensed off and capitalised is determined based on the best
estimate as if the engine maintenance and overhaul costs are accounted for under the time and
material basis. The carrying amount of the advance payment relating to PBH agreements for the Group
and the Company at 31 March 2009 was $139.5 million (2008: $156.5 million) and $89.9 million
(2008: $116.1 million) respectively. The maintenance and repair costs covered by PBH agreements
which are expensed off during the year amounted to $77.8 million (2007-08: $71.2 milion) for the
Group and $75.7 million (2007-08: $69.0 milion) for the Company.