Guide to Airline Industry KPIs

Capacity metrics like available seats miles (ASM) are often analyzed in order to get a sense of seat supply and its implications on pricing. Capacity is multiplied by a utilization metric (load factor) to arrive at revenue passenger miles (RPM), a metric for the number of passenger miles that generate revenue. RPM is multiplied by a yield metric (passenger yield) to arrive at total revenue for passengers. A similar calculation is often done for the cargo revenue as well. The addition of both passenger and cargo revenue leads to total revenue.

A number of expenses are subtracted from the revenue. Labor, fuel, airport landing fees and maintenance costs are all important expenses for an airline. CASM-Ex captures all costs excluding fuel on a per available seat mile basis.

For profitability, EBIT, EBITDA and EBITDAR are all a focus. EBITDA is looked at due to the industry’s high depreciation and amortization costs, while EBITDAR is also analyzed to normalize for each company’s different accounting treatments of their rent expenses.

Airlines are generally modeled on a per available seat mile (ASM) or kilometer (ASK) basis in order to analyze the unit economics of each business. Revenue is often looked at on a revenue per available seat mile basis (RASM) or passenger revenue per available seat mile (PRASM) basis.