Number 61 - Functional Classification of Account 63 "Interrupted Trips Expense"
Civil Aeronautics Board, Office of Comptroller
Issue Date: April 13, 1984
Effective Date: January 1, 1984
Reporting Directive No. 58 issued January 31, 1984, stated that the correct functional accounts for reporting Interrupted Trips Expense were Function 6900 for Group I carriers and Function 5500 for Groups 11 and III carriers. These are the functions prescribed by the Uniform System of Accounts and Reports (USAR).
On the other hand, Accounting and Reporting Directives No. 9 issued April 10, 1973, which is still effective, states that payments to passengers who were denied boarding on oversold flights should be recorded in Account 6563 "Reservation and Sales-Interrupted Trips Expense" for Group III carriers and Account 6763 "Promotion and Sales-Interrupted Trips Expense" for Group II carriers, while Group I carriers would record this expense in Account 6963 "General Services and Administration-Interrupted Trips Expense." The reasoning behind this accounting is that denied boarding compensation is in the nature of a penalty imposed on air carriers for overbooking flights and is an expense incident to documenting sales and controlling and arranging or confirming aircraft space for traffic sold. Therefore, 6500, 6700 and 6900 are the proper functions for recording these payments. Other expenses incurred in connection with denied boardings, such as providing the oversold passengers with overnight hotel accommodations, meals, phone calls, ground transportation should also be recorded in these functions as applicable. Interrupted trips expense not falling into the above category should be reported in Functions 5500 or 6900 in accordance with the USAR.
Accordingly, I am rescinding Reporting Directive No. 58 since the reporting prescribed by it is inconsistent with Accounting and Reporting Directive No. 9.
I apologize for any inconvenience this change may have caused.
This action is taken under the authority delegated in section 385.27(b) of the Board's Organization Regulations (14 CFR 385.27(b)).
Joseph L. Kull