Singapore Airlines 2015 Annual Report Download - page 126

Notes to the Financial Statements
31 March 2015
3 Significant Accounting Estimates (continued)
(b) Depreciation of property, plant and equipment – aircra fleet
Aircra are depreciated on a straight-line basis at rates which are calculated to write down their cost to their estimated
residual values at the end of their operational lives. Certain estimates regarding the operational lives and residual values
of the fleet are made by the Group based on past experience and these are in line with the industry. The operational lives
and residual values are reviewed on an annual basis. The carrying amount of the Group’s and the Company’s aircra fleet
at 31 March 2015 was $9,632.3 million (2014: $9,788.4 million) and $7,553.2 million (2014: $8,228.6 million) respectively.
During the financial year, the Group revised the estimated useful lives of certain aircra types to better reflect the economic
useful lives with eect from 1 April 2014. The changes are in line with industry standards, and resulted in a reduction in
depreciation expense of approximately $44.6 million for the financial year ended 31 March 2015.
(c) Passenger revenue recognition
Passenger sales are recognised as operating revenue when the transportation is provided. The value of unused tickets is
included as sales in advance of carriage on the statement of financial position and recognised as revenue at the end of
two years. This is estimated based on historical trends and experiences of the Group whereby ticket upli occurs mainly
within the first two years. The carrying amount of the Group’s and the Company’s sales in advance of carriage at 31 March
2015 was $1,464.7 million (2014: $1,446.3 million) and $1,328.6 million (2014: $1,376.4 million) respectively.
(d) Frequent Flyer programme
The Company operates a frequent flyer 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 flyer benefits 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 benefits. Any remaining unutilised benefits
are recognised as revenue upon expiry. The carrying amount of the Group’s and the Company’s deferred revenue at
31 March 2015 was $612.5 million (2014: $572.9 million).
(e) Aircra 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 flying hours flown. A portion of the cost
is expensed at a fixed 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 o 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 2015 was $375.8 million
(2014: $409.9 million) and $272.9 million (2014: $354.9 million) respectively. The maintenance and repair costs covered by
PBH agreements which are expensed o during the year amounted to $47.7 million (FY2013/14: $54.1 million) for the
Group and $33.9 million (FY2013/14: $46.9 million) for the Company.
124 FINANCIAL