The financial performance of the airline industry is sensitive to aircraft utilization and cost control. The industry uses a number of common measures to evaluate financial performance. Three of these are as follows:
Passenger Load Factor = RPM/ASM
Operating Revenue per Available Seat Mile = Operating Revenue/ASM Operating Cost per Available Seat Mile = Operating Cost/ASM
Available seat mile (ASM) is the total number of seats available for transporting passengers mul- tiplied by the total number of miles flown during a reporting period. Revenue passenger mile (RPM) is the total number of seatspurchased by passengers multiplied by the total number of miles flown during a reporting period.
The following table provides some recent operating statistics for four passenger airlines:
|
|
Available Seat Miles (ASM)
(in millions)
|
Revenue Passenger Miles (RPM)
(in millions)
|
OperatingRevenue
(in millions)
|
OperatingCost
(in millions)
|
|
Northwest Airlines
|
88,593
|
68,476
|
$ 7,936
|
$ 8,800
|
|
Delta Air Lines
|
134,383
|
98,674
|
13,303
|
14,089
|
|
U.S. Airways
|
51,494
|
37,741
|
5,536
|
5,850
|
|
Southwest Airlines
|
76,861
|
53,418
|
6,530
|
5,976
|
a. Prepare a table showing for each airline the load factor, operating revenue per ASM, operating cost per ASM, and operating margin (profit) per ASM. Round to four decimal places.
b. Interpret the results in (a) for the four airlines.