Revenue per Available Seat Mile (RASM)

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Revenue per Available Seat Mile (RASM)

What RASM is

Revenue per Available Seat Mile (RASM) measures how much operating revenue an airline generates for each seat (occupied or empty) flown one mile. It’s expressed in cents per available seat mile and reflects all recurring operating revenue sources, not just ticket sales.

Why it matters

  • Provides a capacity‑normalized view of an airline’s revenue performance.
  • Allows comparison across airlines and time periods regardless of fleet size or network length.
  • Captures ancillary revenues (baggage fees, seat selection, onboard sales, Wi‑Fi, change fees), which are increasingly important to many carriers’ business models.

How to calculate RASM

RASM = Total operating revenues / Available seat miles (ASM)

  • Total operating revenues: income from core airline operations (ticket revenue plus ancillary fees and other routine operating receipts). Excludes one‑time gains such as asset sales or unusual nonrecurring items.
  • Available seat miles (ASM): total seats available multiplied by miles flown (for the period).

Example: If an airline records $200 million in operating revenue and 1,000 million ASMs in a quarter, RASM = $200,000,000 / 1,000,000,000 = $0.20 per ASM = 20 cents per ASM.

RASM vs. CASM

  • CASM (Cost per Available Seat Mile) = Operating costs / ASM. It measures average cost to fly one seat one mile and is also expressed in cents per ASM.
  • RASM focuses on revenue; CASM focuses on cost. Comparing the two shows unit profitability:
  • If RASM > CASM, the airline earns a unit profit per seat‑mile (before non‑operating items).
  • If RASM < CASM, the airline is operating at a unit loss.
  • Caveats: Some carriers report CASM excluding volatile items (e.g., fuel), which can distort comparisons. Consistent definitions are essential for meaningful analysis.

Special considerations

  • Low‑cost carriers often rely heavily on ancillary revenues. Because RASM captures these extras, it’s particularly useful for assessing such carriers’ performance.
  • Metrics can be presented in ways that favorably influence perceptions (e.g., exclusions in CASM), so review company reporting notes.
  • Use RASM together with CASM, load factor, yield, and other metrics for a fuller picture of network performance and profitability.

Key takeaways

  • RASM = operating revenue per available seat mile; it normalizes revenue by capacity.
  • It includes ancillary revenues and excludes one‑time gains.
  • Comparing RASM to CASM indicates unit profitability; consistent metric definitions are crucial for accurate comparisons.