What Is Revenue Passenger Mile?
Let me tell you directly: a revenue passenger mile, or RPM, is a key metric in the transportation industry that tracks the number of miles traveled by paying passengers, and it's especially common in airline statistics. You calculate RPM by multiplying the number of paying passengers by the distance they travel. For instance, if an airplane carries 100 passengers over 250 miles, that's 25,000 RPM generated.
Key Takeaways
- Revenue passenger mile (RPM) is a transportation industry metric primarily used by the airline industry to show the number of miles traveled by paying passengers.
- Available seat miles (ASM) measures an airplane's carrying capacity available to generate revenue.
- The load factor is a percentage that reflects how effective an airline is at earning revenue.
- To calculate an airline's load factor, divide the airline's revenue passenger mile by its available seat miles.
- A high load factor indicates an airline is efficient at selling seats and generating income.
Understanding Revenue Passenger Mile
You should know that revenue passenger miles form the backbone of most transportation metrics. I compare RPM often to available seat miles (ASM), which measures an airplane's total carrying capacity available for generating income. By dividing RPM by ASM, an airline figures out its load factor.
The load factor is a percentage that shows how effective the airline is at selling seats and earning revenue. Obviously, higher load factors are what airlines want because empty seats represent an opportunity cost. RPM acts as an asset utilization metric, calculating the rate of utilization or occupancy of the airplane by travelers. This metric doesn't account for the dollar amount, though— even with a high load factor, you still need to know the fare prices to determine actual revenue dollars.
The Department of Transportation's Bureau of Transportation Statistics keeps datasets of aggregate RPM and ASM for domestic and international flights. For February 2021, U.S. air carriers had 26.5 billion RPM domestically and internationally against 49.5 billion ASM, resulting in a load factor of 0.53%.
RPM indicates traffic volume, but when paired with ASM, it provides airline management with critical data on how many seats they need to fill for better profitability.
Airline RPM Reporting
Airlines report RPM statistics monthly and on a year-to-date basis. In 2020, three of the largest U.S. carriers each exceeded 55 billion RPM: American Airlines with 71.2 billion, Delta Airlines with 61.2 billion, and United Airlines with 57.1 billion.
Combined with ASM data, this showed American was the most efficient at loading its fleet that year, with a load factor of 0.64%, slightly ahead of United's 0.60% and Delta's 0.56%.
RPM Around the World
As more people fly within their countries and abroad, RPM—or RPK in metric-system countries—will continue to grow. This is particularly true for developing nations building out airport infrastructure to match their economic growth.
This airline traffic statistic helps governments plan airport capacity and allocate slots to airlines. Aircraft manufacturers, like the duopoly of Boeing and Airbus, monitor long-term RPM trends to plan future plane production.
No matter if they're based in Asia, Europe, or Latin America, airline companies must compile this key traffic volume statistic to shape their forward business strategies and attract passengers in the highly competitive market.
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