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Revenue
9 Months Ended
Sep. 30, 2020
Revenue from Contract with Customer [Abstract]  
REVENUE REVENUE
Revenue by Geography. The table below presents the Company's operating revenue by principal geographic region (as defined by the U.S. Department of Transportation) (in millions):
Three Months Ended
September 30,
Nine Months Ended
September 30,
2020201920202019
Domestic (U.S. and Canada)$1,672 $7,094 $7,675 $20,056 
Atlantic365 2,103 1,799 5,627 
Pacific282 1,280 1,346 3,867 
Latin America170 903 1,123 2,821 
Total$2,489 $11,380 $11,943 $32,371 
Advance Ticket Sales. All tickets sold at any given point of time have travel dates extending up to 12 months. The Company defers amounts related to future travel in its Advance ticket sales liability account. The Company's Advance ticket sales liability also includes credits issued to customers on electronic travel certificates ("ETCs") and future flight credits ("FFCs"), primarily for ticket cancellations, which can be applied towards a purchase of a new ticket. In April 2020, due to the COVID-19 pandemic, the Company extended the expiration dates of ETCs from 12 months from the date of issuance to 24 months from the date of issuance and extended the expiration of FFCs, for tickets issued between May 1, 2019 and March 31, 2020, to 24 months from the original issue date. As of September 30, 2020, the Company's Advance ticket sales liability included $3.0 billion related to these credits and approximately 90% of these credits have expiration dates extending beyond 12 months. However, given the uncertainty of travel demand caused by COVID-19, the Company is unable to estimate the amount of the ETCs and FFCs that will be used within the next 12 months and has classified the entire amount of the Advanced ticket liability in current liabilities even though some of the ETCs and FFCs could be used after the next 12 months. Also, the Company is unable to estimate the December 31, 2019 Advance ticket sales that will be recognized in revenue in 2020 due to the higher than historical refunds and exchanges into ETCs or FFCs. The Company continues to use its historical experience and most recent trends and program changes to estimate its breakage. The Company will continue to update its breakage estimates as future information is received.
In the three and nine months ended September 30, 2020, the Company recognized approximately $0.5 billion and $2.9 billion, respectively, and in the three and nine months ended September 30, 2019, the Company recognized approximately $4.1 billion and $3.4 billion, respectively, of passenger revenue for tickets that were included in Advance ticket sales at the beginning of those periods.
Ancillary Fees. The Company charges fees, separately from ticket sales, for certain ancillary services that are directly related to passengers' travel, such as ticket change fees, baggage fees, inflight amenities fees, and other ticket-related fees. These ancillary fees are part of the travel performance obligation and, as such, are recognized as passenger revenue when the travel occurs. The Company recorded $157 million and $699 million of ancillary fees within passenger revenue in the three and nine months ended September 30, 2020, respectively. The Company recorded $645 million and $1.9 billion of ancillary fees within passenger revenue in the three and nine months ended September 30, 2019, respectively. Effective August 30, 2020, the
Company eliminated change fees on all standard Economy and Premium cabin tickets for travel within the U.S. 50 states, Puerto Rico and the U.S. Virgin Islands.
Frequent Flyer Accounting. The table below presents a roll forward of Frequent flyer deferred revenue (in millions):
Three Months Ended
September 30,
Nine Months Ended
September 30,
2020201920202019
Total Frequent flyer deferred revenue - beginning balance$5,670 $5,198 $5,276 $5,005 
Total miles awarded268 662 1,056 1,951 
Travel miles redeemed (Passenger revenue)(87)(607)(444)(1,634)
Non-travel miles redeemed (Other operating revenue)(16)(34)(53)(103)
Total Frequent flyer deferred revenue - ending balance$5,835 $5,219 $5,835 $5,219 
In the three and nine months ended September 30, 2020, the Company recognized, in Other operating revenue, $378 million and $1.2 billion, respectively, related to the marketing, advertising, non-travel miles redeemed (net of related costs) and other travel-related benefits of the mileage revenue associated with our various partner agreements including, but not limited to, our JPMorgan Chase Bank, N.A. ("Chase") co-brand agreement. The Company recognized $489 million and $1.5 billion, respectively, in the three and nine months ended September 30, 2019, related to those revenues.
In the first quarter of 2020, the Company entered into a Third Amended and Restated Co-Branded Card Marketing Services Agreement (as amended from time to time, the "Co-Brand Agreement") with Chase. The Co-Brand Agreement extended the term of the agreement into 2029 and modified certain other terms, resulting in a different allocation among the separately identifiable performance obligations. The portion related to the MileagePlus miles awarded of the total amounts received from our various partner agreements is deferred and presented in the table above as an increase to the frequent flyer liability. We determine the current portion of our frequent flyer liability based on expected redemptions in the next 12 months. Given the uncertainty in travel demand caused by COVID-19, we currently estimate a greater percentage of award redemptions will occur beyond 12 months, however this estimate may change as travel demand and award redemptions become clearer in future periods.