US Airways 2011 Annual Report Download - page 86

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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 the Company's historical data. The Company 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 the Company's 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.
The Company purchases capacity, or ASMs, generated by the Company'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. The Company'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. The Company classifies revenues generated from transportation on these carriers as
Express passenger revenues. Liabilities related to tickets sold by the Company for travel on these air carriers are also included in the Company's air traffic
liability and are subsequently relieved in the same manner as described above.
The Company 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).
(n) Maintenance and Repair Costs
Maintenance and repair costs for owned and leased flight equipment are charged to operating expense as incurred.
(o) 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, 2011, 2010 and 2009 were
$11 million, $10 million and $11 million, respectively.
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