Calculation Of Frequent Flyer Based On Deferred Income Method And Incremental Cost Method On The Accounting Treatment And Its Influence

With the rapid growth of the world economy,people live and work at an increasingly faster pace.The airplane has become an indispensable means of transportation.With the gradual homogenization of products and services in the airline industry,the mode of competition between airlines is constantly shifting,shifting strategic objectives from price and service to customers.In this competitive context,the airline industry has been forced to develop various service incentives to increase customer loyalty,thus giving rise to frequent flyer program.The accounting for frequent flyer program,which is closely related to frequent flyer program in China,is always in continuous improvement,with significant adjustments made by the Ministry of Finance in 2008 and 2018,respectively.This article introduces the basic theory,accounting treatment and scope of applying the incremental cost method and the deferred revenue method,and compares and analyses the advantages and disadvantages of the two accounting methods used in the Chinese aviation industry.Taking Air China’s frequent flyer program "Phoenix Miles" as an example and taking into account the latest statistical data,we analysis which accounting method is more suitable for the current situation of the Chinese airline industry and propose improvement measures for the accounting of frequent flyer program.