Definition of cost per available seat mile (CASM)
Cost per available seat mile (CASM) refers to the unit operating cost of a carrier, which is the cost incurred in operating each seat mile offered, expressed in cents. This metric is derived by dividing the total operating costs by the available seat miles (ASM) of the carrier. Available seat miles refer to the total number of seats available multiplied by the number of miles flown.
The cost per available seat mile is a crucial performance metric in the airline industry, as it helps determine the profitability of an airline’s operations. By measuring the cost of operating each seat mile offered, the metric can be used by airline executives to identify areas for potential cost savings and efficiency improvements. Such areas may include optimizing resources such as fuel consumption, labor costs, maintenance, and other operational expenses.
Additionally, the cost per available seat mile serves as an important benchmark in the industry, allowing air carriers to compare their unit costs against those of competitors. By benchmarking their performance against industry peers, airlines can identify areas where they are underperforming and develop strategies to improve their competitive position.
In summary, the cost per available seat mile is a critical metric for measuring the efficiency and profitability of an airline’s operations. Through rigorous measurement and analysis of this metric, airlines can identify areas for optimization and drive improvements in their operational performance.
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