Revenue Recognition

3 Months Ended

Mar. 31, 2023

Revenue from Contract with Customer [Abstract]

Revenue Recognition

Revenue Recognition

As of March 31, 2023 and December 31, 2022, the Company’s air traffic liability balance was $430 million and $328 million, respectively, which includes amounts classified in other long-term liabilities. During the three months ended March 31, 2023, 87% of the air traffic liability as of December 31, 2022 was recognized as passenger revenue within the Company’s condensed consolidated statements of operations. Of the air traffic liability balances as of March 31, 2023 and December 31, 2022, $76 million and $60 million, respectively, was related to unearned membership fees.

During the three months ended March 31, 2023 and 2022, the Company recognized $10 million and $22 million, respectively, in passenger revenues within the Company’s condensed consolidated statements of operations, related to expected and actual expiration of customer rights to book future travel.

Operating revenues are comprised of passenger revenues, which includes fare and non-fare passenger revenues, and other revenues. Disaggregated operating revenues are as follows (in millions):

	Three Months Ended March 31,
	2023		2022
Passenger revenues:
Fare	$	303	$	229
Non-fare passenger revenues:
Baggage	221		130
Service fees	217		162
Seat selection	72		54
Other	17		13
Total non-fare passenger revenue	527		359
Total passenger revenues	830		588
Other revenues	18		17
Total operating revenues	$	848	$	605

The Company is managed as a single business unit that provides air transportation for passengers. Operating revenues by principal geographic region, as defined by the U.S. Department of Transportation (the “DOT”), are as follows (in millions):

	Three Months Ended March 31,
	2023		2022
Domestic	$	781	$	546
Latin America	67		59
Total operating revenues	$	848	$	605

The Company attributes operating revenues by geographic region based upon the origin and destination of each passenger flight segment. The Company’s tangible assets consist primarily of flight equipment, which are mobile across geographic markets. Accordingly, assets are not allocated to specific geographic regions.

Frequent Flyer Program

The Company’s Frontier Miles frequent flyer program provides frequent flyer travel awards to program members based on accumulated mileage credits. Mileage credits are generally accumulated as a result of travel, purchases using the co-branded credit card and purchases from other participating partners. The Company defers revenue for mileage credits earned by passengers under its Frontier Miles program based on the equivalent ticket value a passenger receives by redeeming mileage credits for a ticket rather than paying cash.

The Company has a credit card affinity agreement with its credit card partner, Barclays Bank Delaware (“Barclays”), through 2029, which provides for joint marketing, grants certain benefits to co-branded credit cardholders (“Cardholders”) and allows Barclays to market using the Company’s customer database. Cardholders earn mileage credits under the Frontier Miles program and the Company sells mileage credits at agreed-upon rates to Barclays and earns fees from Barclays for the acquisition, retention and use of the co-branded credit card by C