US Airways 2008 Annual Report Download - page 141

Table of Contents
US Airways, Inc.
Notes to Consolidated Financial Statements — (Continued)
(n) Revenue Recognition
Passenger Revenue
Passenger revenue is recognized when transportation is provided. Ticket sales for transportation that has not yet been provided are
initially recorded as air traffic liability on the consolidated balance sheets. The air traffic liability represents tickets sold for future travel
dates and estimated future refunds and exchanges of tickets sold for past travel dates. The majority of tickets sold are nonrefundable. A
small percentage of tickets, some of which are partially used tickets, expire unused. Due to complex pricing structures, refund and
exchange policies, and interline agreements with other airlines, certain amounts are recognized in revenue using estimates regarding both
the timing of the revenue recognition and the amount of revenue to be recognized. These estimates are generally based on the analysis of
US Airways' historical data. US Airways and members of the airline industry have consistently applied this accounting method to
estimate revenue from forfeited tickets at the date travel was to be provided. Estimated future refunds and exchanges included in the air
traffic liability are routinely evaluated based on subsequent activity to validate the accuracy of US Airways' estimates. Any adjustments
resulting from periodic evaluations of the estimated air traffic liability are included in results of operations during the period in which the
evaluations are completed.
Passenger traffic commissions and related fees are expensed when the related revenue is recognized. Passenger traffic commissions
and related fees not yet recognized are included as a prepaid expense.
US Airways purchases capacity, or ASMs, generated by US Airways Group's wholly owned regional air carriers and the capacity of
Air Wisconsin Airlines Corp. ("Air Wisconsin"), Republic Airways Holdings ("Republic"), Mesa Airlines, Inc. ("Mesa") and Chautauqua
Airlines, Inc. ("Chautauqua") in certain markets. Air Wisconsin, Republic, Mesa and Chautauqua operate regional jet aircraft in these
markets as part of US Airways Express. US Airways classifies revenues related to capacity purchase arrangements as Express passenger
revenues. Liabilities related to tickets sold for travel on these air carriers are also included in US Airways' air traffic liability and are
subsequently relieved in the same manner as described above.
US Airways collects various excise taxes on its ticket sales, which are accounted for on a net basis.
Cargo Revenue
Cargo revenue is recognized when shipping services for mail and other cargo are provided.
Other Revenue
Other revenue includes checked and excess baggage charges, beverage sales, ticket change and service fees, commissions earned on
tickets sold for flights on other airlines and sales of tour packages by the US Airways Vacations division, which are recognized when the
services are provided. Other revenues also include processing fees for travel awards issued through the Dividend Miles frequent traveler
program and the marketing component earned from selling mileage credits to partners, as discussed in Note 1(k).
(o) Maintenance and Repair Costs
Maintenance and repair costs for owned and leased flight equipment are charged to operating expense as incurred.
(p) Selling Expenses
Selling expenses include commissions, credit card fees, computerized reservations systems fees, advertising and promotional
expenses. Advertising and promotional expenses are expensed when incurred. Advertising and promotional expenses for the years ended
December 31, 2008, 2007 and 2006 were $10 million, $16 million and $16 million, respectively.
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