What Is Revenue Per Available Seat Mile (RASM)?

Revenue per available seat mile (RASM) is a unit of measurement commonly used to compare the efficiency of various airlines. It is obtained by dividing operating income by available seat miles (ASM). Generally, the higher the RASM, the more profitable the airline under question. Revenue is represented in cents and is ෴not solely limited to ticket sales, as other factors of efficiency and profitability are taken into account.

Understandi🦄ng Revenue Per Available Sea⛎t Mile (RASM)

Revenue per available seat mile (RASM) is a term airlines use to describe and evaluate their 澳洲幸运5官方开奖结果体彩网:financial performance. Revenue per available seat mile (RASM) is more encompassing than total revenue because it factors in all ꧅operating revenue, in terms of capacity, rather than just passeng൩er revenue.

Revenue per available seat mile (RASM) has been adopted as a favorite standard unit of measurement by most airlines and 澳洲幸运5官方开奖结果体彩网:investment analysts that follow the airlines. Critics contend, however, that airlines, like most businesses, haveꦏ traditionally favored the use of metrics that can cast them in the best possibl✃e light.

By explicitly including all sources of revenue, RASM includes the myriad of revenue sources air carriers have experimented with including fees or charges for baggage, seat selection, food and drink, and Wi-Fi. Airlines list their RASM—also referred to as "operating unit revenue"—in their quarterly and annual 澳洲幸运5官方开奖结果体彩网:financial statements.

Calculating Revenue Per Available𓆉 Seat Mile (RASM)

The RASM represents the total operating revenue per seat (empty or ful♍l) flown per mile. In order to calculate their RASM for a given period, an airline divides its total operating revenues by the available s✨eat miles:

RASM = Total Operating Revenues/Available Seat Miles.

Total 澳洲幸运5官方开奖结果体彩网:operating revenue is the income the airline generates from its primary business activities. This includes the money airlines make from selling tickets and money from seat upgrades, baggaꦇge fees, food and beverages, and reservation ch💦ange fees.

Available seat miles (ASM) measures the carrying capacity of an airplane that's available to generate revenue. To calculate seat miles, the airline multiplies the available seats on a plane by the number of miles that plane will fly per flight.

Revenue Per Available Seat Mile (RA꧒SM) vs. Cost Per Avaꦚilable Seat Mile (CASM)

Cost per available seat mile (CASM)—also known as "unit cost" or "operating expenses per ASM"—is another common metric airlines use to measure efficiency and performance. CASM is a measure of cost efficiency and represents the average cost to fly an aircraft seat (either empty or ticketed) one mile. CASM differs from RASM in a significant way. While RASM focuses on revenues earned, CASM focuses on expenses impacting an airline's 澳洲幸运5官方开奖结果体彩网:bottom line.

Airlines include various operating costs in their CASM calculation, such as operating expenses, maintenance expenses, administration, and overhead. One criticism of CASM is that some a🍷irlines e♎xclude fuel costs in their calculation, which then calls into question the accuracy of the metric.

To calculate CASM, the airlines divide their operating costs by the available seat miles. The CASM is measured in cents. Airlines generally report this metric on their quarterly and annual financial statements. A low CASM indicates th♌e airline is efficient at managing iꦅts costs, which could lead to higher profit margins. 

This contrasts with RASM, which measures the revenue or income the airline generates. Airlines aim for a high and growing RASM as a measurement of finan♋cial strength.

Special Considerations

Revenue per available seat mile (RASM) is an especially important metric for low-cost airlines. Many of these airlines discount the cost of their basic fares significantly in order to attract customers. Very similar to the 澳洲幸运5官方开奖结果体彩网:loss leader strategy common in retail sales, the 澳洲幸运5官方开奖结果体彩网:airlines know the reve꧅nue t🌳hey generate from these basic fares will probably not b🐼e enough to maintain profitability.

Instead, the airline will need to become adept at 澳洲幸运5官方开奖结果体彩网:upselling, or enticing the customer to purchase additional items, such as inflight entertainment, mea💜ls, and beverages. Because RASM includes these forms of revenue, it's an important metric♔ in tracking an airline's financial performance.