Revenue Recognition

9 Months Ended

Sep. 30, 2023

Revenue from Contract with Customer [Abstract]

Revenue Recognition

Revenue RecognitionAs of September 30, 2023 and December 31, 2022, the Company’s air traffic liability balance was $310 million and $328 million, respectively, which includes amounts classified as other long-term liabilities. During the nine months ended September 30, 2023, 92% 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 September 30, 2023 and December 31, 2022, $65 million and $60 million, respectively, was related to unearned membership fees.

During the three and nine months ended September 30, 2023 and 2022, the Company recognized $16 million, $36 million, $22 million and $67 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 September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Passenger revenues:
Fare	$	302	$	386	$	966	$	1,035
Non-fare passenger revenues:
Service fees	244		220		706		583
Baggage	211		202		664		518
Seat selection	65		61		211		183
Other	40		14		90		42
Total non-fare passenger revenue	560		497		1,671		1,326
Total passenger revenues	862		883		2,637		2,361
Other revenues	21		23		61		59
Total operating revenues	$	883	$	906	$	2,698	$	2,420

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 September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Domestic	$	818	$	832	$	2,476	$	2,197
Latin America	65		74		222		223
Total operating revenues	$	883	$	906	$	2,698	$	2,420

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 Cardholders.