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Revenue Recognition (Notes)
 9 Months Ended
Sep. 30, 2020
Revenue from Contract with Customer [Abstract]  
Revenue from Contract with Customer [Text Block] Revenue Recognition
The Company categorizes the revenues received from contracts with its customers by revenue source as we believe it best depicts the nature, amount, timing, and uncertainty of our revenue and cash flow. The following table provides the revenues recognized by revenue source for the three and nine months ended September 30, 2020 and 2019 (in millions):
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2020
2019
 
2020
2019
Passenger revenue
 
 
 
 
 
Passenger travel
$
420

$
1,914

 
$
1,973

$
5,563

Loyalty revenue - air transportation
25

91

 
153

275

Other revenue
 
 
 
 
 
Loyalty revenue
38

54

 
127

146

Other revenue
9

27

 
42

79

Total revenue
$
492

$
2,086

 
$
2,295

$
6,063


TrueBlue® points earned from ticket purchases are presented as a reduction to Passenger travel within passenger revenue. Amounts presented in Loyalty revenue - air transportation represent the revenue recognized when TrueBlue® points have been redeemed and the travel has occurred.
Contract Liabilities
Our contract liabilities primarily consist of ticket sales for which transportation has not yet been provided, unused credits available to customers, and outstanding loyalty points available for redemption (in millions):
 
September 30, 2020
 
December 31, 2019
Air traffic liability - passenger travel
$
1,020

 
$
929

Air traffic liability - loyalty program (air transportation)
703

 
661

Deferred revenue
42

 
10

Total
$
1,765

 
$
1,600


During the nine months ended September 30, 2020 and 2019, we recognized passenger revenue of $697 million and $856 million respectively, that was included in passenger travel liability at the beginning of the respective periods.
The Company elected the practical expedient that allows entities to not disclose the amount of the remaining transaction price and its expected timing of recognition for passenger tickets if the contract has an original expected duration of one year or less or if certain other conditions are met. We elected to apply this practical expedient to our contract liabilities relating to passenger travel and ancillary services as our tickets or any related passenger credits generally expire one year from the date of issuance.
In response to the impact of COVID-19 on air travel, we extended the expiration dates for travel credits issued from February 27 through June 30, 2020 to a 24 month period. Accordingly, any revenue associated with these travel credits, which are deferred in air traffic liability, will be recognized within 24 months. We continue to monitor our customers' behavior to determine whether any portion of these travel credits may need to be classified as non-current on our consolidated balance sheets. Given the change in contract duration, our estimates of revenue from unused tickets may be subject to variability and differ from historical experience.
TrueBlue® points are combined in one homogeneous pool and are not separately identifiable. As such, the revenue is comprised of the points that were part of the air traffic liability balance at the beginning of the period as well as points that were issued during the period.
In April 2020, we executed a pre-purchase arrangement of TrueBlue® points with our co-brand credit card partner for $150 million. The funds are expected to be applied to future point purchases ratably over the course of one year. As the funds are not yet associated with a point, they are considered to be short-term and have been included within other accrued liabilities on our consolidated balance sheets. The carrying value of this arrangement was approximately $75 million as of September 30, 2020. The proceeds from this arrangement were classified within operating activities on our condensed consolidated statements of cash flows.
The table below presents the activity of the current and non-current air traffic liability for our loyalty program, and includes points earned and sold to participating companies for the nine months ended September 30, 2020 and 2019 (in millions):
Balance at December 31, 2019
$
661

TrueBlue® points redeemed
(153
)
TrueBlue® points earned and sold
195

Balance at September 30, 2020
$
703

 
 
Balance at December 31, 2018
$
580

TrueBlue® points redeemed
(275
)
TrueBlue® points earned and sold
342

Balance at September 30, 2019
$
647


The timing of our TrueBlue® point redemptions can vary; however, the majority of our points are redeemed within approximately three years of the date of issuance.