A revenue passenger mile (RPM) is a major metric that airlines use to assess their performance. One RPM is one paying passenger flying 1 mile. It combines two data sets: how many miles the airline is flying and how many seats it has sold on the plane. For example, a flight with 100 paying passengers flying 400 miles represents 40,000 RPMs.

Once the RPMs are determined, airlines can take the formula a step further and calculate the revenue per passenger mile, dividing the passenger revenue by the total RPMs. At a time when many airlines are struggling to keep themselves aloft, cutting every bit of dead wood is essential. Low RPM for a route may indicate that it's time to cut that service short.

Investors interested in the airline industry can use RPM as well as get a sense of how much business an airline has done over the course of the year. The revenue may remain the same, but if the RPM has dropped, this indicates that business is declining and the airline is making it up elsewhere in higher rates or in fees. Similarly, if a smaller airline is posting increasing RPMs, it indicates that business is expanding steadily, even if revenue is low.

An RPM is also a useful way to double check a company's consumer confidence index. When it comes to getting on a plane and letting someone else fly around at an altitude of hundreds of feet, it's important that customers can feel safe.

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