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Number 179 - Accounting and Reporting Freight Revenues and Related Traffic Commissions

Department of Transportation, Research and Special Programs Administration, Office of Airline Statistics
Number 179
Issue Date: 6/15/94
Effective Date: Immediately
Part: 241
Section: 12

The purpose of this directive is to clarify the proper accounting for and reporting of freight revenues and the related traffic commissions. Several air carriers are reporting on Form 41 Schedule P-1.2, Statement of Operations, their freight revenues at published tariff rates rather than at the actual market rates charged. Reporting freight revenues at published tariff rates causes freight yields to be inflated and adversely affects any analysis of freight revenues.

Title 14 Code of Federal Regulations (14 C.F.R.) §241.12-06(a) states for the Property account: "Record revenue from the transportation by air of property including excess baggage." What is revenue? Accounting Terminology Bulletin No. 2 (ATB #2) issued by the AICPA Committee on Terminology states "Revenue results from the sale of goods and the rendering of services and is measured by the charge made to customers, or tenants for goods and services furnished to them."

What then is to be recorded as freight revenue? Based on ATB #2, the amount recorded depends on what the customer was charged. Therefore, carriers should record the actual freight revenue received from the shipper or air freight forwarder, even if different from the actual tariff.

As to what should be recorded in Account 39, Traffic Commissions, 14 C.F.R. §241.12-39(a) states: "Record here charges by others, including associated companies, for commissions arising from sales of transportation." The commission actually paid is the amount to be recorded in Account 39.

Based on the above discussion, Table A summarizes, for each air carrier grouping, the correct accounting and reporting for freight revenues, and related traffic commissions.

This action is taken under authority delegated in 14 C.F.R. 385.27(b).

If you have any questions, please contact Mr. Clay Moritz at (202) 366-4385.

James W. Mitchell
James W. Mitchell
Director
Office of Airline Statistics

ATTACHMENT

Table A - Accounting and Reporting for Freight Revenues and Related Traffic Commissions by Air Carrier Grouping

 AccountingForm 41 Reporting
1. Group I Air Carriers with operating Revenues Under $20 million:  
Freight RevenuesAccount 3106.1, Transport Revenues/FreightSchedule P-1.1, Transport Revenue Line 2, Scheduled Service, Other
Traffic CommissionsAccount 6939, Traffic CommissionsSchedule P-5.1, Line 12, Traffic Related Expense
2. Group I Air Carriers over $20 million:  
Freight RevenuesAccount 3106.1, Transport Revenues/FreightSchedule P-1.2, Account 3906.1, Property--Freight
Traffic CommissionsAccount 6939, Traffic CommissionsSchedule P-6, Line 27, Traffic Commissions/Cargo
3. Group II Air Carriers:  
Freight RevenuesAccount 3906.1, Transport Revenues/FreightSchedule P-1.2, Account 3906.1, Property--Freight
Traffic commissionsAccount 6739.2, Traffic commissions/PropertySchedule P-6, Line 27, Traffic Commissions/Cargo
4. Group III Air Carriers:  
Freight RevenuesAccount 3906.1, Transport Revenues/FreightSchedule P-1.2, Account 3906.1, Property--Freight
Traffic CommissionsAccount 6539.2, Traffic Commissions/PropertySchedule P-6, Line 27 (Traffic Commissions/Cargo)
Schedule P-7, Line 21, Directly Assignable to Cargo