Airlines Revenue Recognition Task Force 


AICPA Revenue Recognition Task Forces are charged with developing revenue recognition implementation issues that will provide helpful hints and illustrative examples for how to apply the new Revenue Recognition Standard.

Task Force Members:

  • Dave Dickson, Ernst & Young LLP (Chair)
  • Rachel Bell, Virgin America
  • Stewart Bell, United
  • Chris Berry, Alaska Air Group
  • LeAnna Buchwald, JetBlue
  • Mike Carreon, American Airlines
  • Robert Gordon, Deloitte LLP
  • Craig Isakson, KPMG LLP
  • Leah Koontz, Southwest Airlines
  • Craig Meynard, Delta
  • Simon Whitehead, PricewaterhouseCoopers LLP
  • Eric Woodward, Skywest
Staff Contact: Yelena Mishkevich, Yelena.Mishkevich@aicpa-cima.com

IDENTIFIED REVENUE RECOGNITION IMPLEMENTATION ISSUES

Revenue recognition implementation issues identified by the Airlines Revenue Recognition Task Force, when available, will be posted here.  Full revenue recognition implementation issues will be posted below for informal comments after review by the AICPA Financial Reporting Executive Committee (FinREC).

Issue # Description of Implementation Issue Status
1 Regional Contracts
This implementation issue will describe key elements of Capacity purchase agreements (CPA) and how to account for them under FASB ASC 606.
Out for Exposure until September 1, 2017
3 Passenger Tickets – Breakage and Accounting for Travel Vouchers
This implementation issue will discuss the recognition of revenue for passenger ticket breakage (which consists of tickets for which the passenger is not expected to exercise their rights under the ticket contract with the airline and, as a result, the ticket will expire unused) as well as accounting and breakage considerations related to travel vouchers.
Out for Exposure until June 1, 2017
4
Ancillary Fees and Services
This implementation issue will discuss considerations for applying the guidance in FASB ASC 606 to ancillary services and related fees charged by airlines.
Out for Exposure until June 1, 2017
5
Interline Transactions
This implementation issue will discuss considerations for applying the guidance in FASB ASC 606, including identifying performance obligations for air travel (including at the segment versus the ticket level) and classification under principal vs. agent for arrangements that airlines have amongst each other to sell tickets under which one or more segments of the journey will be flown by another carrier.
Out for Exposure until June 1, 2017
5a. Interline Commissions
This implementation issue will discuss considerations for accounting for commissions in interline transactions.
Submitted to FinREC - March & July 2017
6a. & 6d. Brand Name and Customer List
This implementation issue will discuss considerations related to maintenance of customer list database as well as accounting and recognition of brand/customer list (sales-based royalties) and recognition of other co-brand performance obligations (advertising, marketing, waived bag fees, priority boarding, lounge access)
Out for Exposure until June 1, 2017
6c. Determination of whether loyalty status constitutes a separate deliverable (in addition to flight and other loyalty components in a ticket or other transactions)
This implementation issue will discuss a framework for the assessment of whether “Tier Status” in an affinity program conveys a material right to goods and services and therefore gives rise to a separate performance obligation. This issue was developed jointly with the Gaming and Hospitality Task Forces.
Finalized and included in the AICPA Guide Revenue Recognition
6f. Consideration of Significant Financing Component in Advance Mile Purchases and Miles in Customers’ Accounts
This implementation issue discusses whether miles accumulated in customer loyalty accounts and advance purchases of miles by financial institutions, in which the airline receives time value benefit, have a significant financing component.
Finalized and included in the AICPA Guide Revenue Recognition
6g. Changes in the Volume of Mileage Credits under a Co-branded Credit Card Arrangement
This implementation issues will discuss under the co-brand credit card agreements, when the total amount of consideration and the volume of the various benefits to be delivered to customers are both variable how, if at all, should airlines adjust their allocation of the relative standalone selling price during the term of the contract.
Submitted to FinREC - March 2017
6h. Estimating Standalone Selling Price of Mileage Credits in Customer Loyalty Programs
This implementation issue discusses the acceptable methods for determining standalone selling price of mileage credits awarded to airline loyalty program members.

Finalized and included in the AICPA Guide Revenue Recognition
6i.
Interline Loyalty Transactions
This implementation issue will address whether the sponsoring airline is acting as a principal or agent when its loyalty customers redeem their mileage credits on partner airlines or for non-air travel services or goods from third-party providers and whether the related revenue and expense should be presented on a gross or net basis.
Out for Exposure until June 1, 2017
8
Accounting for Contract Costs - Commissions and Selling Costs
This implementation issue provides considerations for determining whether typical costs incurred in obtaining a ticket qualify for capitalization and, if so, what would be the appropriate amortization period.
Finalized and included in the AICPA Guide Revenue Recognition
10 Accounting for Passenger Taxes & Related Fees
This implementation issue discusses if taxes and related fees charged by government and airport authorities required to be collected and remitted by the airline should be recorded on a gross or net basis.
Finalized and included in the AICPA Guide Revenue Recognition
11 Change Fees
This implementation issue will address whether changes made to an existing itinerary qualify as a distinct service and the appropriate revenue classification of change fees.
Out for Exposure until June 1, 2017


FEEDBACK REQUESTED

Draft Revenue Recognition Implementation Issues included for informal comment, when available, will be listed below.

Respondents should submit any comments including the implementation issue number to Yelena.Mishkevich@aicpa-cima.com by the dates noted below:

Issue # Comment Due Date
2-1 - Regional Contracts September 1, 2017
2-3 - Passenger Tickets – Breakage and Accounting for Travel Vouchers
June 1, 2017
2-4 - Ancillary Fees and Services
June 1, 2017
2-5 - Interline Transactions
June 1, 2017
2-6a & d - Brand Name and Customer List
June 1, 2017
2-6i - Interline Loyalty Transactions
June 1, 2017
2-11 - Change Fees
June 1, 2017


The Airlines Revenue Recognition Task Force recommends the following AICPA products for current revenue recognition issues:



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