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ASM or ASK

Available seat miles (ASM) is a measure of an airline's passenger carrying capacity equal to the number of seats available multiplied by the miles flown. It is the fundamental unit used to measure an airline's production. Cost per ASM (CASM) is a common metric used to measure an airline's unit costs by dividing operating costs by ASMs. Revenue per ASM (RASM) is a measure of an airline's unit revenue calculated by dividing operating revenue by ASMs.

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159 views

ASM or ASK

Available seat miles (ASM) is a measure of an airline's passenger carrying capacity equal to the number of seats available multiplied by the miles flown. It is the fundamental unit used to measure an airline's production. Cost per ASM (CASM) is a common metric used to measure an airline's unit costs by dividing operating costs by ASMs. Revenue per ASM (RASM) is a measure of an airline's unit revenue calculated by dividing operating revenue by ASMs.

Uploaded by

Mahmood Mushtaq
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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5/20/2016

AvailableseatmilesWikipedia,thefreeencyclopedia

Availableseatmiles
FromWikipedia,thefreeencyclopedia

Availableseatmiles(ASM)orAvailableseatkilometres(ASK)[1]isameasureofanairlineflight's
passengercarryingcapacity.Itisequaltothenumberofseatsavailablemultipliedbythenumberofmiles
orkilometresflown.Anavailableseatmileisthefundamentalunitofproductionforapassengercarrying
airline.[2]Aunitinthiscaseisoneseat,availableforsale,flownonemile.Forexample,anaircraftwith
300seatsavailableforsaleflying1,000statutemileswouldgenerate300,000ASMsforthatparticular
flight.Thattheseatsareavailableforsaleiscritical.Anaircraftthathad300seatsbutwhichwaslimited
(forregulatoryortechnicalreasons)tosellingonly250ofthemonaparticularflightof1,000mileswould
generate250,000ASMsonthatflight,not300,000.Similarly,ifpassengerseatsonaparticularflightare
dedicatedtocrewrestpurposes,suchseatswouldnotbeincludedinthecalculationofASMsforthatflight.

Contents
1 Relatedquantities
1.1 CostperASM/ASK(CASM/CASK)
1.2 ExfuelCASMorCASMexfuel
1.3 RevenueperASM(RASM)
2 References

Relatedquantities
CostperASM/ASK(CASM/CASK)
CASM(orCASK)isacommonlyusedmeasureofunitcostintheairlineindustry.CASMisexpressedin
centstooperateeachseatmileoffered,andisdeterminedbydividingoperatingcostsbyASMs.This
numberisfrequentlyusedtoallowacostcomparisonbetweendifferentairlinesorforthesameairline
acrossdifferenttimeperiods(sayforoneyearvstheprecedingyear).AlowerCASMmeansthatitiseasier
fortheairlinetomakeaprofit,astheyhavetochargelesstobreakeven.AlowCASM,however,isbyno
meansaguaranteeofprofitability.Further,CASMshouldonlybecomparedacrossairlineswithcare.For
instance,allotherthingsbeingequal,anairlinewithalongeraveragestagelengthwillhavealower
CASM,becausefixedcostswillaccountforalowerportionofitstotalcosts.Forthisreason,tobe
meaningful,CASMcomparisonsacrossdifferentairlinesgenerallyrequire,ataminimum,thatCASMsfor
allairlinesbeadjustedtoacommonstagelength,orthattheCASMsbegraphedversusthestagelengthof
alltheairlinesbeingcompared.
CASMisgenerallycalculatedforaparticularairline(orportionofanairlineforinstance,anairline's
Pacificoperationsasopposedtotheentireairline)foraparticularperiodoftimeayear,aquarter,amonth
andsoforth.Itcanalsobecalculatedforaparticularrouteofanairline.However,whenitiscalculatedfor
anythingotherthantheentireoperationofanairline,therelevantcostswillinevitablyinvolvecost
allocationsthatrequirejudgments.Forinstance,thesalaryoftheairline'sseniormanagementneedstobe
spreadacrossthedifferentpartsoftheairlineandcanbedivviedupacrossitsroutesaccordingtomany
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differentmethodologiesbythenumberofflightsonthatrouteduringthattimeperiod,bythenumberof
flighthoursonthatroute,etc.Thereisnotnecessarilyanyrightmethodformakingsuchcostallocations,
butitisimportantwhenmakingcomparisonsacrossairlinesthatifanallocationmethodologyisrelevant
(i.e.lessthantheentireofeachairlineisbeingcompared)thenthesameallocationmethodologyisused
witheachairlinebeingcompared.
ForasimpleexampleofthecalculationofCASM,inthesecondquarterof2011,SouthwestAirlines
(includingitsAirTranAirwayssubsidiary)hadoperatingcostsof$3.929bnand31.457bnASMs,as
reflectedinSouthwest'sSECForm10Qforthatperiod.[3]Southwest'ssystemCASMforthesecond
quarterof2011wasthen:
CASM=DirectOperatingCost/AvailableSeatMile=$3.929billion/31.457billion=12.49cents

ExfuelCASMorCASMexfuel
CASMexcludingfuelisacommonlyusedmeasuretocomparethecostperformanceofairlinesexcepting
thecostoffuel.Duetothevolatilityofoilprices,airlinefuelcostisgenerallynotviewedascontrollable
(otherthanintheshorttermviafuelhedging).Therefore,management'ssuccessatcontrollingcostsisoften
judgedbylookingathowtheairline'sexfuelCASMchangesfromoneperiodtoanother.Forinstance,in
thesecondquarterof2011SouthwestAirlineshadfuelcostsof$1.527bn(again,includingitsAirTran
subsidiary).[3]Southwest'ssystemCASMexfuelforthesecondquarterof2011wasthen:
CASMexfuel=(DirectOperatingCostFuelCost)/AvailableSeatMile=($3.929billion$1.527
billion)/31.457billion=7.63cents
Again,caremustbetakenincomparingCASMexfuelacrossperiods.Inparticular,ifaveragestagelength
fortheairlinehaschangedsignificantly,thiscouldhaveasignificantimpactonCASMexfuel.

RevenueperASM(RASM)
RASMisacommonlyusedmeasureofunitrevenueforairlines,expressedincentsreceivedforeach
availableseatmileanddeterminedbydividingvariousmeasuresofoperatingrevenuebyAvailableSeat
Miles.Thisnumberisfrequentlyusedtoallowacomparisonbetweendifferentairlinesoracomparisonof
thesameairlineacrossperiods.Intheory,thehighertheRASMthemoreprofitabletheairlineshouldbe,
assumingthattheCASMremainsconstant.Variousmeasuresofrevenuemaybeused.PassengerRASM
(orPRASM)ispassenger(orscheduledticket)revenueperASM.OperatingRASMorTotalRASMisthe
airline'stotaloperatingrevenueperASM.
So,forinstance,inthesecondquarterof2011,Southwesthadscheduledrevenueof$3.876bnandtotal
operatingrevenueof$4.136bn.[3]Southwest'ssystemPassengerRASMandOperatingRASMforthe
secondquarterof2011weretherefore:
PassengerRASM=$3.876billion/31.457billion=12.32cents
OperatingRASM=$4.136billion/31.457billion=13.15cents

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Again,RASMcomparisonsacrossperiodsoracrossairlinesalsoneedtobemadewithcare.Allelsebeing
equal,revenuegenerallyincreaseswithaveragestagelength.However,revenuegenerallydoesnotincrease
asquicklyasstagelength,meaningthatRASMtypicallydecreasesasaveragestagelengthincreases.

References
1.WhatisASKYouTubeVideo(http://www.youtube.com/watch?v=D3mzbY1TgOs)
2.ATAhandbook"ATAAirlineHandbook".Archivedfromtheoriginalon22February2009.Retrieved
20090302.
3.U.S.SecuritiesandExchangeCommission:Form10QforSouthwestAirlines(http://edgar.sec.gov/Archives/edg
ar/data/92380/000009238011000070/form10q.htm)

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Categories: Civilaviation Transporteconomics
Thispagewaslastmodifiedon5October2015,at03:29.
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