Spirit Airlines 2014 Annual Report Download - page 68

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Notes to Financial Statements—(Continued)
68
The following table illustrates total cash proceeds received from the sale of mileage credits and the portion of such
proceeds recognized in revenue immediately as marketing component:
Consideration received
from credit card mile
programs
Portion of proceeds
recognized immediately
as marketing component
Year Ended (in thousands)
December 31, 2014 . . . . . . . . . . . . . . . . . $ 33,819 $ 28,140
December 31, 2013 . . . . . . . . . . . . . . . . . 28,496 23,124
December 31, 2012 . . . . . . . . . . . . . . . . . 24,938 20,998
Total unrecognized revenue from future FREE SPIRIT award redemptions and the sale of mileage credits was $2.8
million and $2.6 million at December 31, 2014 and 2013, respectively. These balances are recorded as a component of air
traffic liability in the accompanying balance sheets.
Non-ticket Revenue Recognition
Non-ticket revenues are generated from air travel-related services for baggage, bookings through the Company’s call
center or third-party vendors, advance seat selection, itinerary changes and loyalty programs. Non-ticket revenues also consist
of services not directly related to providing transportation such as the FREE SPIRIT affinity credit card program, $9 Fare Club
and the sale of advertising to third parties on Spirit’s website and on board aircraft.
The following table summarizes the primary components of non-ticket revenue and the revenue recognition method
utilized for each service or product:
Year Ended December 31,
Non-ticket revenue Recognition method 2014 2013 2012
(in thousands)
Baggage. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Time of departure $ 318,103 $ 275,958 $ 217,536
Passenger usage fee. . . . . . . . . . . . . . . . . . . . . Time of departure 221,992 188,911 149,577
Advance seat selection . . . . . . . . . . . . . . . . . . Time of departure 76,270 59,241 48,956
Service charges for changes and cancellations When itinerary is changed 38,388 32,546 27,762
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 131,855 111,711 91,765
Non-ticket revenue . . . . . . . . . . . . . . . . . . . . . $ 786,608 $ 668,367 $ 535,596
Charges for services recognized at time of departure are initially recorded as a liability until time of departure. The
passenger usage fee is charged for tickets sold through the Company’s primary sales distribution channels. The primary sales
distribution channels for which passenger usage fees are charged include sales through the Company’s website, sales through
the third-party provided call center and sales through travel agents; the Company does not charge a passenger usage fee for
sales made at its airport ticket counters. Other non-ticket revenues include revenues from other air related charges as well as
non-air related charges. Other air related charges include optional services and products provided to passengers such as on-
board products, travel insurance and use of the Company’s call center or travel agents, among others. Non-air related charges
primarily consist of revenues from advertising on the Company’s aircraft and website, the Company’s $9 Fare Club
subscription-based membership program and the Company’s FREE SPIRIT affinity credit card program.
Airframe and Engine Maintenance
The Company accounts for heavy maintenance and major overhaul and repair under the deferral method whereby the cost
of heavy maintenance and major overhaul and repair is deferred and amortized until the earlier of the end of the remaining
lease term or until the next scheduled heavy maintenance event.
Amortization of heavy maintenance and major overhaul costs is charged to depreciation and amortization expense and
was $35.8 million, $23.6 million and $9.1 million for the years ended 2014, 2013 and 2012, respectively. During the years
ended 2014, 2013 and 2012, the Company deferred $33.6 million, $70.8 million and $61.6 million, respectively, of costs for
heavy maintenance. At December 31, 2014 and 2013, the Company had deferred heavy maintenance balance of $198.9 million
and $165.3 million, and accumulated heavy maintenance amortization of $75.8 million and $40.0 million, respectively.