xcltflyboy From United States of America, joined Nov 2011, 36 posts, RR: 0 Posted (3 years 1 month 3 weeks 2 days ago) and read 2308 times:
This question is for those in airline revenue accounting: In determining how much revenue a station generates, how do the airlines assign ticket revenue to the stations of a given city pair? For example, a ticket is sold for JFK-LAX for $200. How much of that revenue is assigned to the JFK station, and how much is assigned to the LAX station? In my mind, the full $200 shouldn't be recorded as all JFK's revenue, because if it weren't for the pax wanting to travel to LAX, they would not have departed from JFK; shouldn't LAX receive some of the revenue?
I ask this question with the assumption that each station has their own profit & loss statements, i.e. airline management has to determine the profitability of each station. So, there has to be method to assign ticket revenue generated by each station.
Thanks in advance to anyone that can give me some insight into this accounting question!
Xcltflyboy From United States of America, joined Nov 2011, 36 posts, RR: 0
Reply 1, posted (3 years 1 month 4 days 2 hours ago) and read 1973 times:
It seems that no one has an answer for me. Does anyone know if this topic has been addressed in another thread or resource they can point me to for more information on this topic? (I searched several times for such a thread/topic, but couldn't find one).
Viscount724 From Switzerland, joined Oct 2006, 26021 posts, RR: 22
Reply 2, posted (3 years 1 month 2 days 22 hours ago) and read 1889 times:
In my experience, a JFK-LAX ticket sold at JFK would all be assigned to the point of sale, regardless whether it's a one way or round trip ticket. LAX isn't doing any of the work so why should they get any of the credit?
Works the same in the other direction where the revenue would be credited to LAX for sales made there, so why complicate things?
Of course if someone bought two one way tickets at each end of the route they would be assigned separately to each point of sale.
These days, with so many tickets purchased online, point of sale data is becoming less relevant. Airlines just want to make the sale regardless where it originates.
However, my question about revenue assignment is not cocerned with where a ticket is purchased, but simply the city pairs involved with a given ticket. As we both know, very few tickets are actually issued at airport ticket counters these days.
As a CPA, I know all to well how "bean counters" like to make revenue recognition as precise as possible. That's why I assumed that airlines would try to allocate revenue between city pairs involved on a given ticket. But, I do agree with you that assigning all the ticket revenue to the originating station would be the simpliest method.