A Guide to Airline Terminology

1
A Guide to Airline Terminology

• Some Key Operating Statistics
• ASMAvailable Seat Miles
• RPMRevenue Passenger Miles
• Yield (per ASM, per RPM)
• Load Factor--passenger
• Load Factor--break-even

2
Analyzing Statements

• Income Statement
• Revenue
• Direct Costs
• Indirect Costs
• Total Costs
• Profit
• operating profit
• others cargo before taxes
• - taxes net
• - dividends retained
• Break-Even Analysis

3
Calculating Quarterly Break-Even Passenger Load
Factor

• Indirect costs
• -------------------------------------------
• Revenue/pass direct costs/pass
• You will need to know the following
• Total costs, direct costs, indirect costs
• Net Revenue, of passengers

4
Airline Identifying key success factors

• Profitability, as measured by operating income
  per available seat mile (ASM), is determined by 3
  factors yield (total operating revenues divided
  by the number of revenue passenger miles (RPMs)
  load factor (the ratio between RPMs and ASMs and
  unit cost, which is total operating expenses
  divided by ASMs. Thus,
• Income Revenue X RPMs less Expenses
• ASMs RPMs ASMs ASMs

5

• To enhance revenue, some airlines have withdrawn
  from their most intensely competitive routes
  other seek a fare premium over cut-price airlines
  through superior punctuality, convenience,
  comfort, and services. To improve load factors,
  companies have become flexible in their pricing
  and in allocating different planes to different
  routes. All seek ways to cut costs.