Revenue per Available Seat Mile – RASM

Posted in Finance, Accounting and Economics Terms, Total Reads: 551
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Definition: Revenue per Available Seat Mile – RASM

Revenue per Average Seat Mile, also known as RASM, is a unit of measurement that is used for comparing the efficiencies of different airlines. It is a measure of unit revenue for airlines. It is expressed in terms of cents received by the company for every seat mile available.


Average seat mile, or ASM, is the measure of the passenger carrying capacity of an airline flight. Hence revenue per available seat mile is obtained by dividing the operating income of the company by the average seat miles. A higher value of RASM is preferred by the airline companies as a higher value of RASM means higher efficiency of the airline and hence higher profitability of the airline.


RASM is used as a standard unit by most airline companies for measurement of profitability. This is because it shows a clearer picture of the total revenue by factoring the operating revenue in terms of capacity rather than directly using the passenger revenue. Although in the past like other businesses, these airline companies have used metrics that show them in a better light than they are actually in.

 

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