How to Record Air Ticket Sales, Purchases and Refunds

What is in a ticket price

• Fare. The airline's price for the seat.
• Fuel surcharge (FSC). An extra airline charge, often with the code YQ or YR.
• Taxes and fees. Airport and government charges. The airline collects them and passes them on.
• Commission. What the airline or your consolidator pays you for selling the ticket.
• Service charge. What you charge your customer for your work.

A consolidator is a larger agency that sells tickets to agencies that do not issue their own.

Why keep the fare and the taxes apart

• You see your real income. In one sales account, a NPR 60,000 sale hides an income of NPR 2,700.
• VAT is on the right amount. The VAT register has separate columns for taxable and non-taxable sales, so your bill must split them too.
• You can check the commission. Airlines pay commission on the fare, not on taxes.
• Refunds are easier. The taxes on an unused ticket can often be refunded, even when the fare cannot. You need the tax amount to claim them.
• Your books match your supplier's. The consolidator's bill and the BSP statement also show the fare and taxes apart.

A worked example

Your agency is registered for VAT. On 10 Kartik 2083 you book a return ticket from Kathmandu to Doha for Ram Thapa through a consolidator.

Here VAT is charged only on the service charge. Ask your auditor whether VAT also applies to the fare, the FSC or your commission.

1. Buy the ticket (10 Kartik 2083)

The consolidator bills the ticket price less your commission. You owe it NPR 58,800.

Some consolidators charge a service fee instead of paying commission. Record the fee as a cost, and ask your auditor if you can claim its VAT.

2. Sell the ticket (10 Kartik 2083)

You bill the customer the ticket price, your service charge and VAT on the service charge: NPR 61,695 in all.

Your income from this ticket is NPR 2,700: commission of NPR 1,200 and service charge of NPR 1,500. The other NPR 60,000 comes in from the customer and goes out to the consolidator.

3. The customer pays (15 Kartik 2083)

When you pay the consolidator, debit the consolidator and credit the bank with NPR 58,800.

4. A full refund

The airline cancels the flight and refunds the whole ticket. You return your service charge too. Make a credit note for the whole invoice: the sales entry turned round.

When you pay the customer back, debit the customer and credit the bank. The consolidator's refund is the purchase entry turned round: debit the consolidator NPR 58,800 and commission received NPR 1,200, and credit the two purchase accounts.

5. A partial refund with a penalty kept (25 Kartik 2083)

In a different case, the customer cancels before travel. The airline keeps NPR 6,000 of the fare as a penalty and refunds the rest. You keep your service charge, and the customer gets back NPR 54,000.

The NPR 6,000 penalty stays in both sales and cost, so the two cancel out. Your own cancellation fee, if you charge one, is new income.

6. The airline refund: a purchase return

The consolidator refunds NPR 54,000 less the NPR 1,200 commission it takes back. Record a purchase return (a debit note).

The consolidator now owes you NPR 52,800, as a payment or off your next bill. Your income from this ticket is now NPR 1,500: the service charge.

Common mistakes

• The whole ticket as income. Sales look large and your real margin is hidden.
• One amount for the whole ticket. VAT and the VAT register come out wrong.
• Deleting or changing the invoice for a refund. Make a credit note instead.
• Refunding the customer before the airline confirms. You may pay back more than you get back.
• Forgetting the commission taken back. Your commission income stays too high.
• No ticket number or passenger name on the bill. A later refund cannot find its sale.

Doing this in CAS360

• Ticket lines. The air fare goes in a Taxable column, and the FSC and taxes in a Non-taxable column. VAT is added to the air fare only.
• Purchase first. "Post and create sales" turns a ticket purchase into the customer's invoice.
• Airline ledgers. A product can post each airline to its own sales and purchase ledger.
• Refunds. A credit note against the original invoice, for less than the fare if needed. The airline's refund is a purchase return.
• Margin. Ticket Search finds a ticket by number or passenger name and shows its sale, cost and margin.
• Nothing is deleted. A cancelled bill is marked cancelled and keeps its entries. With IRD e-billing (CBMS, Enterprise plan), an issued bill can only be cancelled or credited. A bill filed with IRD can only be credited.
• BSP. CAS360 checks your BSPlink billing statement (Excel or CSV) against your ticket purchases. It is switched on per company.

Credit notes, purchase returns, customer and supplier ledgers, the Party Statement and IRD-format VAT registers are on every plan, Free included. Read more about the Free plan, CAS360 for travel agencies and all plans and prices.