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Travel-based accounting (also known as 'availed' or 'flown' accounting).

This is the most basic form of revenue accounting, and historically the oldest. Revenue is assessed by valuing each coupon as it is flown, and deducting that value from the forward sales account. Naturally enough, with the complicated rules covering proration, when two or more flight coupons were valued at different times, the total did not always add back to the value of the ticket. This means the accounting is very suspect unless journeys are all at sector fares. Even so, once volumes start to increase, accounting on this basis becomes manually intensive, and rapidly uneconomic. As a result, airlines using this methodology tend to produce revenue declarations based on samples, multiplied out by the number of passengers.

As a result, this approach is no longer available on new systems, but a number of airlines still operate to these standards on old systems built in-house.

Sales-based accounting

This is a much more sophisticated approach, developed primarily by British Airways and KLM. Using this methodology, no account (from an accounting standpoint) is taken of the flown coupon. The accounting is based entirely on 'matched' revenue. For this to happen effectively, sales must be processed quickly; this usually means automatically. All accounting is done from the sales record, which is processed in full in all cases. Usage records only require minimal data capture in order to be matched against a sales record, and thus can also be captured automatically. In the event of a usage coupon being received before a sales coupon, complex algorithms determine the value of the coupon for management reporting purposes. No accounting takes place until the sale is reported, after which the coupon value is deducted from forward sales/unearned revenue, and transferred to revenue. As a result, the value of unused coupons on the database always equals the value of the forward sales/unearned revenue account. The advantage of this approach is that processing is highly automated, and human intervention in the accounting is usually prevented. This ensures very high levels of accounting control and reconciliation at all times, and is suited to airlines with high volumes of traffic, good access to automated sales data, and strict accounting requirements. The accounting based on reported sales revenue also simplifies the accounting and control of discounts on tickets at the time of sale.

First coupon accounting

This is a hybrid approach between the simplicity of travel based accounting, and the control of sales based accounting. The principal is that the accounting is generated from the first coupon, based on full record capture. When the second coupon comes in, the data is already available for matching, removing the need to re-key data. The principle is very good, and is suited to airlines which have problems with access to high frequency automated data, or which have relatively lower volumes, and lower operational costs.

The disadvantage is that the first coupon in is usually the usage coupon. As a result, the whole record often needs to be built up manually from input, generating possible errors. In addition, the sales record may be processed shortly afterward, making the data entered manually redundant. Differences can occur, and this requires frequent adjustments to key account balances, rendering them difficult to validate. The resulting accounting error may be small, but this may be too much for some accounting standards. Furthermore, discounts at the time of issue may not readily be visible to capture staff, resulting in incorrect reporting of net revenue until the sales coupon is received and the discount identified. The volume of manual activity required is often too expensive for larger carriers, and those with high staff costs, though increased use of e-ticketing, scanned document images and ATBs is making this more viable, though at a price.

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