What is a Revenue Passenger Mile - RPM
A revenue passenger mile (RPM) is a transportation industry metric that shows the number of miles traveled by paying passengers and is typically an airline traffic statistic. Revenue passenger miles are calculated by multiplying the number of paying passengers by the distance traveled. For example, an airplane with 100 passengers that flies 250 miles has generated 25,000 RPM.
BREAKING DOWN Revenue Passenger Mile - RPM
Revenue passenger miles are the backbone of most transportation metrics. RPM is often compared to available seat miles (ASM), a measure of total capacity. By dividing RPM by ASM, an airline can calculate load factors. Higher load factors, obviously, are desired because empty seats are an opportunity cost for an airline.
The Department of Transportation's (DOT) Bureau of Transportation Statistics maintains datasets of aggregate RPM as well as ASM for domestic and international flights. For October 2017 domestic RPM was 58.2 billion against 68.3 billion ASM, which translated into a load factor of 85.2%. International RPM and ASM during the month was 23.4 billion and 29.3 billion, respectively, for a load factor of 79.9%. RPM shows traffic volume, but it goes hand-in-hand with ASM to give airline management critical data about how many seats it must fill to achieve greater profitability.
Airline RPM Reporting
Airlines report RPM statistics on a monthly and year-to-date basis. Three of the largest U.S. carriers each had over 100 billion RPM in the first half of 2017. American Airlines recorded 110.5 RPM, Delta Airlines registered 105.5 RPM, and United Airlines had 104.0 RPM. In conjunction with the ASM data, it was demonstrated that Delta was the most efficient in loading its fleet during that six-month period. Delta's load factor was 85.0%, higher than United's 81.8% and American's 81.2%.
RPM Around the World
As more people take to the skies to travel within their own countries and to foreign lands, RPM (or RPK for countries on the metric system) will only grow. This is especially true for developing nations that are just beginning massive build-outs of their airport infrastructure to keep pace with their economic growth rates. This airline traffic statistic will help governments plan airport capacity and slots for individual airlines. Aircraft makers, led by the duopoly of Boeing and Airbus, keep an eye on the longer-term trends in RPM to plan their future production of planes. Whether based in Asia, Europe, Latin America or Europe, airline companies need to compile this key traffic volume statistic to assist in their forward business strategies to attract passengers in the intensely competitive market.