Revenue Recognition

3 Months Ended

Mar. 31, 2020

Revenue from Contract with Customer [Abstract]

The Company’s contracts with customers have two principal performance obligations, which are the promise to provide transportation to the passenger and the frequent flyer miles earned on the flight. In addition, the Company typically charges additional fees for items such as baggage. Such items are not capable of being distinct from the transportation provided because the customer can only benefit from the services during the flight. The transportation performance obligation, including the redemption of HawaiianMiles awards for flights is satisfied, and revenue is recognized, as transportation is provided. In some instances, tickets sold by the Company can include a flight segment on another carrier which is referred to as an interline segment. In this situation, the Company acts as an agent for the other carrier and revenue is recognized net of cost in other revenue. Tickets sold by other airlines where the Company provides the transportation are recognized as passenger revenue at the estimated value to be billed to the other airline when travel is provided. Differences between amounts billed and the actual amounts may be rejected and rebilled or written off if the amount recorded was different from the original estimate.

The majority of the Company's revenue is derived from transporting passengers on its aircraft. The Company's primary operations are that of its wholly-owned subsidiary, Hawaiian. Principally all operations of Hawaiian either originate and/or end in the State of Hawai'i. The management of such operations is based on a system-wide approach due to the interdependence of Hawaiian's route structure in its various markets. As Hawaiian is engaged in only one significant line of business (i.e., air transportation), management has concluded that it has only one segment. The Company's operating revenues by geographic region (as defined by the DOT) are summarized below:



	Three Months Ended March 31,
	2020		2019
Geographic Information	(in thousands)
Domestic	$	402,014	$	477,520
Pacific	157,130		179,231
Total operating revenue	$	559,144	$	656,751

Hawaiian attributes operating revenue by geographic region based on the destination of each flight segment. Hawaiian's tangible assets consist primarily of flight equipment, which are mobile across geographic markets, and therefore, have not been allocated to specific geographic regions. During the three months ended March 31, 2020 and 2019, North America routes accounted for approximately 54% and 52% of domestic revenue, respectively.

Other operating revenue consists of cargo revenue, ground handling fees, commissions, and fees earned under certain joint marketing agreements with other companies. These amounts are recognized when the service is provided.



	Three Months Ended March 31,
	2020		2019
Passenger Revenue by Type	(in thousands)
Passenger revenue, excluding frequent flyer	$	474,135	$	567,855
Frequent flyer revenue, transportation component	29,334		33,449
Passenger Revenue	$	503,469	$	601,304

Other revenue (e.g., cargo and other miscellaneous)	$	34,183	$	36,231
Frequent flyer revenue, marketing and brand component	21,492		19,216
Other Revenue	$	55,675	$	55,447

For the three months ended March 31, 2020 and 2019, the Company's total revenue was $559.1 million and $656.8 million, respectively. As of March 31, 2020 and December 31, 2019, the Company's Air traffic liability balance, as it relates to passenger tickets (excluding frequent flyer), was $429.2 million and $425.1 million, respectively, which generally represents revenue that is expected to be realized over the next 12 months. During the three months ended March 31, 2020 and 2019, the amount of passenger ticket revenue recognized that was included in Air traffic liability as of the beginning of the respective period was $240.2 million and $296.9 million.

Passenger revenue associated with unused tickets, which represent unexercised passenger rights, is recognized in proportion to the pattern of rights exercised by related passengers (e.g., scheduled departure dates). To calculate the portion to be recognized

as revenue in the period, the Company utilizes historical information and applies the trend rate to the current Air traffic liability balances for that specific period.

Frequent Flyer Revenue

The Company's frequent flyer liability is recorded in Air traffic liability and current frequent flyer deferred revenue and Noncurrent frequent flyer deferred revenue in the Company's unaudited Consolidated Balance Sheet based on estimated and expected redemption patterns using historical data and analysis. As of March 31, 2020 and December 31, 2019, the Company's frequent flyer liability balance was $359.7 million and $349.8 million, respectively.



	March 31, 2020		December 31, 2019
	(in thousands)
Air traffic liability (current portion of frequent flyer revenue)	$	187,387	$	174,588
Noncurrent frequent flyer deferred revenue	172,281		175,218
Total frequent flyer liability	$	359,668	$	349,806

Frequent flyer program deferred revenue classified as a current liability represents the Company's current estimate of revenue expected to be recognized in the next 12 months based on projected redemptions, while the balance classified as a noncurrent liability represents the Company's current estimate of revenue expected to be recognized beyond 12 months.