3.5 Route Profitability
Route profitability is a complex area and is determined by multiple factors, some within the direct control of the airline, whilst other factors are not within their control. There are dozens of metrics that an airline will monitor and assess.
The two main areas to focus on are load factors and yield. If an airline is flying with high load factors it does not necessarily equate to profitability. Equally, high yield does not necessarily equate to high load factors. Therefore, yield is more important than the load factor.
The following are some of the metrics used by airlines to assess profitability:
Available Seat Kilometres (ASK) measures the passenger capacity of an airline.
Revenue Passenger Kilometres (RPK) is a metric used by airlines to display the actual number of kilometres travelled by passengers.
Revenue per Available Seat Kilometre (RASK) is the ratio between revenue and available seat kilometres.
Cost per Available Seat Kilometre (CASK) is the ratio between operating costs and available seat kilometres.
The choice of the airport will have an impact on route profitability. Slot-constrained airports with high aeronautical charges are more expensive for airlines than smaller, under-capacity airports that are competing for business. Airlines are often able to negotiate deals with airports on various aeronautical charges, such as landing fees.
The success of LCCu2019s is attributed to achieving high load factors and maximizing revenue from ancillary services. LCCu2019s usually maximise the number of seats on their aircraft by reducing the seat pitch to operate high-density aircraft. They also maximise the utilization of the aircraft with short turnarounds.