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11/03/2009 – How Does The Media Figure Out An Airlines’ Losses?
When you read the news and reporters discuss airlines being up and down it can sometimes be hard to gauge how exactly how an airline’s ‘plus/minus’ is determined. In fact, it is not one easy factor to determine how an airline is doing. The numbers you read in the news are based on revenue, load factors and many other factors.
A question I have been asked half-a-dozen times in the past few months, as airline stability is increasingly discussed in the news, is “what are Revenue Passenger Miles.” Revenue Passenger Miles (RPMs), which are often a quoted statistic in news stories, are quite simply the number of paid seat miles flown by an airline.
If a plane with 37 seats flies 157 miles, that plane has flown 5,809 ‘Available Seat Miles‘ (ASM). If the same plane is only carrying 23 ‘revenue passengers’ (passengers who have paid for their ticket), the ‘Revenue Passenger Miles’ flown is only 3,611 RPMs.
To put this in perspective, most mainline airlines fly ‘billions’ of available seat miles and revenue passenger miles each month.
How many miles are we discussing here in reality being flown each month by US mainline carriers? To give you an example, the following are the February 2009 reports for two airlines I fly frequently, Southwest Airlines and US Airways.
Total Fleet Size: 539 aircraft
Total February 2009 Available Seat Miles: 7.391-billion
Total February 2009 Revenue Passenger Miles: 5.104-billion
Total Fleet Size: 358 mainline-aircraft
Total February 2009 Available (mainline) Seat Miles: 5.238-billion
Total February 2009 Revenue (mainline) Passenger Miles: 4.043-billion
For comparison, these with Southwest Airlines & US Airways miles flown statistics for February 2008
Total February 2008 Available Seat Miles: 7.908-billion
Total February 2008 Revenue Passenger Miles: 5.427-billion
Total February 2008 Available (mainline) Seat Miles: 5.776-billion
Total February 2008 Revenue (mainline) Passenger Miles: 4.456-billion
While a shift from 4.456-billion to 4.043-billion revenue passenger miles may not see that significant, the loss in revenue is actually quite substantial when do you the math.
Hopefully this simplifies some of the statistics in the daily news reports on the decline of the airline industry.