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The basic economic metric used in the industry. The basic measures explained are the ASK, RPK, Yield, Unit Cost and load factor

The basic economic metric used in the industry. The basic measures explained are the ASK, RPK, Yield, Unit Cost and load factor

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- 1. BASIC ECONOMIC MEASURES FOR AIRLINES Joha Rahman http://pramugari.info/
- 2. THE BASIC MEASURES.  We are used to companies dealing with physical products, like producing cars or buses.  The measures are straight forward  The unit cost will be cost per car  The production size will be .. How many cars produced in a year.  However for airlines, the measures are different. We do not have a physical products.
- 3. THE MEASURE OF PRODUCTS PRODUCED - ASK  Like the example of the number of cars manufactured in a year, the production of an airline is the ASK- Available seat kilometer.  It consists of two components, the seats and the distant flown. So if we have an aircraft with 500 seat and flown at a distant of 10,000 km, then we will have 5,000,000 seat km.
- 4. MEASURE OF SALES - RPK  Although the airline produced the stated ASK, or seats, not all will be sold.. The sale of the products will be measured by RPK.- revenue passengers km.  So in the earlier example of 5000,000 ASK, if only 400 out the 500 seats were sold, then the RPK will be 4,000,000.  The aircraft was 4/5 full, or 80% full
- 5. SOME OF THE LARGE OPERATORS  Some organisation will use the term passenger km, referring to RPK, revenue passenger km. Some of the leading airlines are:  American Airline 197,000  Delta 162,000  Air France 126,000  Continental 125,000 The figures are in million passenger Km
- 6. MEASURE OF SALE RATE – LOAD FACTOR  For physical products, it is easier. If you product 100 cars and manage to sell 85 of them, then you are selling 85% of it.  However for airline is different. For a single flight, like the example where you sell 400 out of 500 seats, the calculation is simple. You are selling 4/5 or 80%.  80% is the load factor for the particular flight…continue...
- 7. MEASURE OF SALE RATE – LOAD FACTOR  However an airline had many type of aircrafts and many sectors.  Some aircraft are small and some are big. Similarly, we have a long sectors and short sectors.  For the load factor, it is calculated based on RPK/ASK. Revenue passenger Km/Available seat Km expressed in %.
- 8. MEASURE OF UNIT REVENUE - YIELD  The RPK and the ASK are measure of the physical products.  What is more important is the revenue earned from the sale.  Yield is measure of the revenue per the seat produced.  Yield = total Revenue/ASK  Note: there are other measure which are not covered.
- 9. UNIT COST (COST PER ASK)  This is the basic measure.  Unit Cost = Total Cost/ ASK  As long as the unit cost is lower than yield, the airline will make a profit.
- 10. THE RESOURCE Blog site: http://pramugari.info/ The author had work with an international airline for more than 35 years, the last 10 years in Training and development. eMail : mktg@joharahman.com

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