Revenue Recognition
Passenger revenue
Passenger revenue is the most significant category in the Company's reported operating revenues, as outlined below:
| | | | | | | | | | | | | | | | | |
| Year Ended December 31, |
| (in thousands) | 2025 | | 2024 | | 2023 |
| Scheduled service | $ | 974,901 | | | $ | 1,030,795 | | | $ | 1,133,001 | |
| Ancillary air-related charges | 1,270,807 | | | 1,129,149 | | | 1,137,226 | |
| Loyalty redemptions | 78,640 | | | 57,115 | | | 54,170 | |
| Total passenger revenue | $ | 2,324,348 | | | $ | 2,217,059 | | | $ | 2,324,397 | |
Sales of passenger tickets not yet flown are recorded in air traffic liability. As of December 31, 2025, the air traffic liability balance was $363.3 million, of which approximately $319.8 million was related to forward bookings, with the remaining $43.5 million related to credit vouchers for future travel.
The normal contract term of passenger tickets is 12 months and passenger revenue associated with future travel will principally be recognized within this time frame. Of the $370.9 million that was recorded in the air traffic liability balance at December 31, 2024, substantially all was recognized into passenger revenue during the 12 months ended December 31, 2025.
The Company periodically evaluates the estimated amount of credit vouchers expected to expire unused and any adjustment is removed from air traffic liability and included in passenger revenue in the period in which the evaluation is complete.
Loyalty redemptions
In relation to the travel component of the Allways Rewards® co-brand credit card contract and the Allways Rewards® loyalty program, the Company has a performance obligation to its members with future travel award redemptions at the airline. The accounting and recognition for the loyalty program redemptions are discussed in Note 2 above.
The following table presents the activity of the co-brand credit card and the loyalty program as of the dates indicated:
| | | | | | | | | | | |
| Year Ended December 31, |
| (in thousands) | 2025 | | 2024 |
| Balance at January 1 | $ | 80,711 | | | $ | 70,813 | |
| Points awarded (deferral of revenue) | 75,546 | | | 67,050 | |
Points redeemed (recognition of revenue) (1) | (78,625) | | | (57,152) | |
Balance at December 31 (2) | $ | 77,632 | | | $ | 80,711 | |
(1) Points are combined in one homogeneous pool and are not separately identifiable. Revenue from points redeemed includes both points that were part of the loyalty program liability at the beginning of the period, as well as points that were issued during the period.
(2) The current portion of the loyalty program liability represents the estimate of revenue to be recognized in the next 12 months based on historical trends, with the remaining balance reflected in noncurrent liabilities expected to be recognized into revenue in periods thereafter.
Third Party Products Revenue
Third party products revenue primarily includes revenue associated with our loyalty program, which is comprised of the marketing component of point sales to the co-brand credit card provider and other marketing related payments which totaled $82.8 million, $86.5 million and $65.4 million for the twelve months ended December 31, 2025, 2024 and 2023, respectively. The accounting and recognition for the loyalty program marketing services are discussed in Note 2 above. The remaining amounts included within third party products revenue relate to travel insurance, hotel rooms, rental cars and ticket attractions. Resort Revenue
The revenues of Sunseeker Resort prior to its sale on September 4, 2025 (Note 15), are set forth in the table below:
| | | | | | | | | | | | | | | | | |
| Year Ended December 31, |
| (in thousands) | 2025 | | 2024 | | 2023 |
| Rooms | $ | 28,172 | | | $ | 31,628 | | | $ | 946 | |
| Food and beverage | 21,280 | | | 29,895 | | | 1,713 | |
| Other | 11,228 | | | 10,227 | | | 222 | |
| Total resort revenue | $ | 60,680 | | | $ | 71,750 | | | $ | 2,881 | |
Revenue from banquets, golf, retail, and spa services is included in other resort revenue. Resort revenue was recognized as the underlying services or goods were provided, with minimal timing differences between service delivery and payment. There were no advance deposit liabilities or guest ledger receivables at December 31, 2025, due to the sale of the Resort on September 4, 2025.
About Revenue Disclosures
Revenue disclosures under ASC 606 explain how a company identifies performance obligations, allocates transaction prices, and determines when revenue is recognized. This section is essential for understanding whether reported revenue reflects genuine economic activity or aggressive accounting choices. Analysts examine the mix of point-in-time versus over-time recognition, which directly affects revenue timing and comparability.
Key signals: rising contract liabilities (deferred revenue) suggest strong future revenue visibility, while declining contract assets may indicate slowing project milestones. Watch for variable consideration estimates — rebates, returns, and performance bonuses that require management judgment. Significant changes in disaggregated revenue by geography or product line can reveal shifting business mix before it appears in headline numbers. Compare revenue growth against contract liability growth to assess sustainability, and scrutinize any changes in the timing of recognition that coincide with earnings pressure.