Basic Measurements in the Airline Business
Revised March 2002
Available Seat Mile (ASM): The Basic Measure Of Capacity
One seat (empty or filled) flying one mile is an ASM
A 129-seat MD-80 flying a 500-mile segment creates 64,500 ASMs.
System ASMs are simply the sum of each of these individual segment calculations
In a typical day in 2001; American made available about 420 million ASMs
Revenue Passenger Mile (RPM): The Basic Measure Of Production
A paying passenger flying one mile creates an RPM
100 passengers flying 500 miles generates 50,000 RPMs
System RPMs are the sum of this calculation for each of the revenue segments we fly.
In a typical day in 2001, American produced 290 million RPMs.
Load Factor: Production Compared To Capacity
To calculate systemwide load factor, divide RPMs by ASMs; In 2001 it's 106.7 billion RPMs divided by 153.9 billion ASMs, or 68.9 percent.
For an individual flight, divide the revenue passengers on board by the aircraft capacity; in the MD-80 example above, it's 100 divided by 129, or 77.5 percent.
High load factors are not necessarily desirable - How much each passenger pays is also important, as we see in the next measure.
Yield: Revenue Per Passenger Mile
To calculate system yield, divide passenger revenue by total RPMs; For American in 2001, this is $14.1 billion divided by 106.1 billion RPMs, or 13 cents per mile.
To calculate a customer's individual yield, divide ticket price by mileage; If a customer pays $98.00 for the 500-mile segment above, the yield would be 19.6 cents per mile.
Revenue Per Available Seat Mile (R/ASM): The Best Basic Measure
Multiply load factor times yield to get the measure of how much revenue we generate per increment of capacity; using the 2001 example above, it's 68.5 percent times 13 cents or 8.90 cents.
Unit Costs Round Out The Picture
Total ASM capacity divided by total operating expense produces unit costs, or how much it costs to fly a seat (empty or filled) one-mile.
In 2001, these were 7.14 cents.
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