frequent flyer miles-liability?
Nov 16, 1998, 4:40 pm
#1
Original Member
Original Poster
Join Date: May 1998
Location: Columbus, OH, USA
Posts: 1
frequent flyer miles-liability?
I am currently taking an accounting class in college, and I had a question for anyone out there. Since the definition of a liability is something the company has to pay to someone other than an owner/partner, and it is unavoidable, since frequent flyer miles are unavoidable for the airlines to pay out (legally), are they still considered a liability, or are they shown as something else on the financial statments for the airlines?
Thanks!
Thanks!
Nov 16, 1998, 6:44 pm
#3
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Join Date: May 1998
Location: New York - DL Gold, AA Gold, AC Prestige, VS Silver
Posts: 811
FF miles are, as Rudi correctly pointed out, a liability. However unlike the figure Rudi mentioned, airlines only value them on their balance sheet as 40 cents/1000 miles or 0.04 cents / mile.
This topic was discussed earlier this year on FlyerTalk. You should go back to the subject:
Mileage Redemption Tips by Michael Greenberg NBC
started by pgupta on 8/6/98 for more info
Although airlines do have somewhat of a liability - ff miles have absolutely no cash value - also airlines impose capacity controls - so ff awards *are avoidable* for airlines - they just have to deny awards which they can legally do (of course, at the expense of customer goodwill). My main point being is that airlines are not compelled to have award seat availability that corresponds with mileage being handed out.
I think someone already pointed out that if airlines allowed unlimited award seat redemption to Hawaii - major airlines would need extra flights just to accomodate all the requests - hence the point that are not bound to provide seats merely because they issued ff miles and placed a destination on an award chart.
This topic was discussed earlier this year on FlyerTalk. You should go back to the subject:
Mileage Redemption Tips by Michael Greenberg NBC
started by pgupta on 8/6/98 for more info
Although airlines do have somewhat of a liability - ff miles have absolutely no cash value - also airlines impose capacity controls - so ff awards *are avoidable* for airlines - they just have to deny awards which they can legally do (of course, at the expense of customer goodwill). My main point being is that airlines are not compelled to have award seat availability that corresponds with mileage being handed out.
I think someone already pointed out that if airlines allowed unlimited award seat redemption to Hawaii - major airlines would need extra flights just to accomodate all the requests - hence the point that are not bound to provide seats merely because they issued ff miles and placed a destination on an award chart.
Nov 17, 1998, 1:45 am
#5
Original Member
Join Date: May 1998
Location: CH-3823 Wengen Switzerland
Programs: miles&more, MileagePlus
Posts: 27,041
sorry- megamiles is correct (at least as I see in the Swissair report): it is per 1K (1'000 miles) and the rate them as 0.8 swiss cents ($0.5) per 1'000 miles.
(yes we say 1 Swiss Frank = 100 centimes)
(yes we say 1 Swiss Frank = 100 centimes)
Nov 17, 1998, 12:55 pm
#7
Original Member
Join Date: May 1998
Location: CH-3823 Wengen Switzerland
Programs: miles&more, MileagePlus
Posts: 27,041
ok PremEx, take this in our four languages:
Rappen (swiss german)
centimes (swiss french)
centissime (swiss italian)
centiaso (swiss rumantsch, spoken by about 90'000 people only, but officially our 4th language)
Rappen (swiss german)
centimes (swiss french)
centissime (swiss italian)
centiaso (swiss rumantsch, spoken by about 90'000 people only, but officially our 4th language)