Accounting for Frequent Fliers

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Case

Reference no. 9-192-040

Subject category: Finance, Accounting and Control

Authors: William J Bruns Jr (Harvard Business School); Susan Harmeling (Harvard Business School)

Published by: Harvard Business Publishing

Originally published in: 1991

Version: 22 June 1993

Length: 7 pages

Data source: Published sources

Topics: Accounting procedures and policies; Cost accounting; Cost allocation; Costing; Financial statements; Legal liability

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Abstract

Airline frequent flier programs offer members the opportunity to earn free flights by accumulating mileage. Accounting and reporting the obligations of airlines and the cost of frequent flier programs raises difficult measurement issues. In 1991, the US Securities and Exchange Commission began to require airlines to disclose the number of free flights program members took. The case allows estimates of the cost and obligations of the United Air Lines program.

Location:

United States

Industry:

Airline industry

Size:

USD9.6 billion revenues

Other setting(s):

1991