Basic Airline Profit Equation

[Ref. The Global Airline Industry Edited By Peter Belobaba, Amedeo Odoni and Cynthia Barnhart © 2009 John Wiley & Sons, L td. ISBN: 978-0-470-74077-4] Operating profit = RPK x Yield – ASK x Unit cost The equation is applicable for any industry – operating profit is the total revenue minus total operating expense. Please be […]

What’s ATK?

[Ref. The Global Airline Industry Edited By Peter Belobaba, Amedeo Odoni and Cynthia Barnhart © 2009 John Wiley & Sons, L td. ISBN: 978-0-470-74077-4] Available Tonne Kilometer (ATK) is defined as the output in units of cargo airlines. ATK is actually a similar concept to the ASK in passenger airlines.

What’s RTK (or RTM)?

[Ref. The Global Airline Industry Edited By Peter Belobaba, Amedeo Odoni and Cynthia Barnhart © 2009 John Wiley & Sons, L td. ISBN: 978-0-470-74077-4] Revenue Tonne Kilometer (RTK) is defined as 1 tonne of cargo transported 1 kilometer Revenue Tonne Kilometer (RTK), is also known as Revenue Ton mile (RTM). The concept is similar to […]

What’s Unit Cost?

[Ref. The Global Airline Industry Edited By Peter Belobaba, Amedeo Odoni and Cynthia Barnhart © 2009 John Wiley & Sons, L td. ISBN: 978-0-470-74077-4] Unit cost, which is an important measure of cost efficiency, both over time and across airlines. It’s defined as the total operating expense divided by the ASK produced by an airline, […]

What’s ASK (or ASM)?

[Ref. The Global Airline Industry Edited By Peter Belobaba, Amedeo Odoni and Cynthia Barnhart © 2009 John Wiley & Sons, L td. ISBN: 978-0-470-74077-4] Available Seat Kilometer (ASK) is the most common measure of airline output (capacity). It’s defined as one available seat flown 1 kilometer: ASK = Num. of seat available x KM traveled […]

What’s Yield in traffic?

[Ref. The Global Airline Industry Edited By Peter Belobaba, Amedeo Odoni and Cynthia Barnhart © 2009 John Wiley & Sons, L td. ISBN: 978-0-470-74077-4] Yield = total passenger revenues / RPK Yield is a measure of the average fare paid by all passengers per kilometer (or mile) flown. For example, if an airline records 140,000 […]

What’s RPK (or RPM)?

[Ref. The Global Airline Industry Edited By Peter Belobaba, Amedeo Odoni and Cynthia Barnhart © 2009 John Wiley & Sons, L td. ISBN: 978-0-470-74077-4] Revenue Passenger Kilometer (RPK) is the most common measure of airline traffic. It’s defined as one paying passenger transported 1 kilometer: RPK = Num. of paid passenger x KM traveled RPK […]

Traffic v.s Demand

[Ref. The Global Airline Industry Edited By Peter Belobaba, Amedeo Odoni and Cynthia Barnhart © 2009 John Wiley & Sons, L td. ISBN: 978-0-470-74077-4] “Total demand” = Traffic + Rejected demand (a.k.a Spill) For passenger airlines: “Traffic” refers to enplaned passengers. “Airline traffic” is the amount of airline output that is actually consumed or sold. […]