US Airways 2011 Annual Report Download - page 121

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Table of Contents
(m) Revenue Recognition
Passenger Revenue
Passenger revenue is recognized when transportation is provided. Ticket sales for transportation that has not yet been provided are initially deferred and
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 Corporation ("Air Wisconsin"), Republic Airline Inc. ("Republic"), Mesa Airlines, Inc. ("Mesa"), Chautauqua Airlines, Inc. ("Chautauqua") and
SkyWest Airlines, Inc. ("SkyWest") in certain markets. US Airways Group's wholly owned regional air carriers, Air Wisconsin, Republic, Mesa, Chautauqua
and SkyWest operate regional aircraft in these markets as part of US Airways Express. US Airways classifies revenues generated from transportation on these
carriers as Express passenger revenues. Liabilities related to tickets sold by US Airways 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 taxes and fees on its ticket sales. These taxes and fees are remitted to governmental authorities and 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(j).
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