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Airline Metrics: Revenue Passenger Kilometers
Ashwin Jadhav, a member of our AirlineGeeks team, has begun highlighting some of the important metrics that airlines monitor on a daily, weekly, monthly, quarterly and yearly basis to improve performance. From a passenger’s perspective, this series will provide an excellent insight on how these metrics affect the way you travel.
Previous Metric in the Series: Available Seat Kilometers
Revenue Passenger Kilometers (RPK) or Revenue Passenger Miles (RPM)* is an airline industry metric that shows the number of kilometers traveled by paying passengers. It is calculated as the number of revenue passengers multiplied by the total distance traveled. Since it measures the actual demand for air transport, it is often referred to as airline “traffic.”
They are often compared to the available seat kilometers (ASK), which show the total number of passenger kilometers that could be generated in order to determine the amount of revenue that comes in compared to the maximum amount.
*While miles are the preferred unit of measuring distance in the U.S., the rest of the world uses kilometers as units for measuring distance. In the aviation industry, kilometers are used more often than miles in formulation and analysis of metrics and key performance indicators.
How is it calculated?
RPKs measure an airline’s demand for their service and are calculated by multiplying the number of paying passengers by the distance traveled. It is:
|Number of revenue passengers × total distance travelled|
This number should be calculated per airplane, but is usually quoted per airline.
An increase in RPK is positive for an airline. It means that more passengers are using their service.
Why is it important?
RPKs are the backbone of most transportation metrics. Airlines have to try to match their supply (ASKs) with the market demand (RPKs). While shortage of seats will often result in higher airfare, excess capacity can lead to reduced margins due to higher fixed costs. So an increase in capacity is positive only if it is supported by an adequate rise in demand for air travel.
RPKs give airline senior management a clear indication of the demand in a given market. To support RPK improvement, airlines should add more seats or increase capacity. Another way to do this without adding capacity is to improve efficiency by utilizing existing capacity.
RPKs are further used to calculate Load Factor and Yield.
Blank Airlines operates one Boeing 737-800 aircraft with a capacity of 200 passengers between New York (JFK) and Chicago (ORD). However, the revenue passengers for the route are 190 passengers per leg. The distance between the two airports is 1,190 KM, which means that the RPK per leg flown is 190 (the passenger demand) multiplied 1,190 (the distance traveled by the passengers).
Hence, Blank Airlines has 226,100 Revenue Passenger Kilometers per flight leg.
Based on the frequency of this route per day and per year, the daily and annual RPKs can be calculated accordingly.
Blank Airlines is a domestic U.S. carrier that operates a fleet of 10 aircraft between major cities in the country. The aircraft, capacity, city-pairs and distances are given below. Assuming that the aircraft operates for all 365 days in a year and assuming that all passengers are revenue passengers, what will the RPKs be per year for Blank Airlines?
|Aircraft||Number of Passengers||City-Pair||Frequency (+ Return Legs)||Distance (KM)|
|Boeing 737-800||190||JFK-ORD||Daily (4x) + (4x)||1,188|
|Boeing 737-800||200||JFK-MIA||Daily (4x) + (4x)||1,757|
|Boeing 737-800||210||JFK-ATL||Daily (4x) + (4x)||1,223|
|CRJ700||60||JFK-IAD||Daily (6x) + (6x)||365|
|CRJ700||62||JFK-PHL||Daily (6x) + (6x)||151|
|CRJ700||63||JFK-YUL||Daily (6x) + (6x)||535|
|CRJ700||68||JFK-CLT||Daily (6x) + (6x)||871|
|CRJ700||66||JFK-BOS||Daily (6x) + (6x)||300|
|A330-300||380||JFK-LAX||Daily (2x) + (2x)||3,975|
|A330-300||410||JFK-SFO||Daily (2x) + (2x)||4,154|
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