DEFINITION of Revenue Per Available Seat Mile (RASM)
Revenue Per Available Seat Mile (RASM) is a unit of measurement commonly used to compare the efficiency of various airlines. It is obtained by dividing operating income by available seat miles (ASM). Generally, the higher the RASM, the more profitable the airline under question. Revenue is represented in cents and is not solely limited to ticket sales, as other factors of efficiency and profitability are taken into account.
Understanding Revenue Per Available Seat Mile (RASM)
Because it is more encompassing than total revenue—factoring in all operating revenue, in terms of capacity, rather than just passenger revenue—RASM has been adopted as a favorite standard unit of measurement by most airlines and analysts that follow them. Critics contend, however, that airlines, like most businesses, have traditionally favored the use of metrics that can cast them in the best possible light.
By explicitly including all sources of revenue, RASM includes the myriad of revenue sources air carriers have experimented with including fees or charges for baggage, seat selection, food and drink, and Wi-Fi.
Cost Per Available Seat Mile (CASM) is a similar and related efficiency metric but focuses on expenses impacting an airline's bottom line.