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2.
Summary of significant accounting policies (cont’d.)
2.23 Revenue and other income
Revenue is recognised when it is probable that the economic benefits associated with the transaction will flow to the Group and
the revenue can be measured reliably.
Passenger seat sales are in respect of scheduled passenger flight and chartered flight income and are recognised upon the
rendering of transportation services net of discounts. The revenue in respect of seats sold for which services have not been
rendered is included in current liabilities as ‘sales in advance’.
Revenue from aircraft operating leases is recorded on a straight-line basis over the term of the lease.
Airport and insurance surcharges, administrative fees, baggage fees, freight and ancillary sales are recognised upon the
completion of services rendered.
Rental income and brand license fees are recognised on an accrual basis.
Interest income is recognised using the effective interest method. When a loan and receivable is impaired, the Group reduces
the carrying amount to its recoverable amount, being the estimated future cash flow discounted at the original effective
interest rate of the instrument, and continues unwinding the discount as interest income. Interest income on impaired loans
and receivables are recognised using the original effective interest rate.
The Group operates a frequent flyer programme where members accumulate points for purchases made which entitle them
to discounts on future purchases. Award points are recognised as a cost of sale at the time of issue while revenue from the
award points is recognised as deferred revenue (included in trade and other payables) upon billing to partners, and recognised
upon redemption of loyalty points by members. The amount of revenue recognised is computed based on the number of points
redeemed and the redemption value of each point which is calculated on a weighted average basis. Effective from 1 January
2017, award points do not expire unless there is no activity in 36 months consecutively (2016: expire 36 months after initial
sale).
Included in trade and other payables is also the deferred breakage. Breakage represents the estimated loyalty points that are
not expected to be redeemed by members. The amount of revenue recognised related to deferred breakage is based on the
number of loyalty points redeemed in a period in relation to the total number expected to be redeemed, which factors in the
Group estimate for the breakage. Breakage is estimated by management based on the terms and conditions of membership
and historical accumulation and redemption patterns, as adjusted for changes to any terms and conditions that may affect
members’ redemption practices.
2.24Foreign currencies
2.24.1 Functional and presentation currency
Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary
economic environment in which the entity operates (‘the functional currency’). The consolidated financial statements are
presented in Ringgit Malaysia, which is the Company’s functional and presentation currency.
2.24.2 Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the
dates of the transactions or valuation where items are remeasured. Foreign exchange gains and losses resulting from the
settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities
denominated in foreign currencies are recognised in profit or loss, except when deferred in other comprehensive income
as qualifying cash flow hedges and qualifying net investment hedges.
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AirAsia Berhad
REPORTS AND FINANCIAL STATEMENTS