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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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