Common Airline Term Definitions

(MoneyWatch)  There are a handful of terms that are unique to the airline industry, and below I've explained the most popular. If you're talking about terms outside the US, you can replace "Mile" with "Kilometer" and the definitions will be the same. I have some upcoming posts on airline numbers at the end of the third quarter, so I thought I'd make sure I had definitions up first.

• Revenue Passenger Mile (RPM) - This is the number of total miles flown multiplied by the number of passengers flown that distance. If an airplane flies 100 miles with 100 passengers, then there are 10,000 RPMs on that flight.
• Available Seat Mile (ASM) - This is similar to an RPM but it measures the total number of seats offered as opposed to the number passengers onboard. Take the total miles flown and multiply by the number of seats flown that distance, regardless of whether or not they're filled. That same flight that goes 100 miles with 100 passengers may have 200 seats. In that case, there would be 20,000 ASMs.
• Yield - Take revenue and divide it by RPMs. On that first flight with 10,000 RPMs, we may have had revenue of $2,000. That means the yield was 20 cents. This is a good measure for looking at revenues on the passenger level.
• Revenue per Available Seat Mile (RASM) - This is pretty self explanatory. You take revenue and divide it by ASMs. In our example, that would mean $2,000 divided by 20,000 ASMs for a 10 cent RASM. This is a good measure of overall revenue performance as opposed to performance on the passenger level.
• Cost per Available Seat Mile (CASM) - Take your expenses and divide them by ASMs. Let's say our costs on this flight were $1,000. That means our CASM was $1,000 divided by 20,000 ASMs, or 5 cents. As you can imagine, if your RASM is greater than your CASM, you've made money.
• Load Factor - This one is very commonly miscalculated. It is actually RPMs divided by ASMs. So in this case, 10,000 RPMs divided by 20,000 ASMs gives us a load factor of 50%. People often think this load factor is calculated by dividing the number of passengers by the number of seats available, but that is actually Seat Factor. On a single flight, there is no difference, but when you look across a network, the number can vary because Load Factor takes into account the distance flown by each plane whereas Seat Factor does not.