Explains in detail what Revenue Passenger Kilometer & Yield is. There are 7 examples to illustrate the explanations. There are 2 exercises to test the reader's knowledge.

1. Prateek Garodia
REVENUE PASSENGER
KILOMETER/MILE & YIELD

2. What is RPK/RPM?
RPM stands for Revenue Passenger Miles
Countries using kilometers as a measure of
distance use RPK
A revenue passenger is one for whose
transportation an air carrier receives
commercial remuneration
RPM is used to measure the number of
revenue passengers flown for each mile
In conjunction with revenue, this
measurement is also used to calculate yield
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3. RPK/RPM Calculation
Revenue Passenger Mile = Revenue
passengers flown * Miles traveled
Let us define some variables to calculate
RPK/RPM
P = total number of revenue generating
passengers
D = total distance travelled
RPK or RPM = P * D
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4. Example 1
An airplane flies a distance of 2,962 miles.
There are 130 passengers in the flight. What is
the RPM?
P = 130
D = 2,962
RPM = 130 * 2,962 = 385,060
In this example, the airline has 385,060
revenue passenger miles
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5. What is FTK/FTM?
FTM stands for Freight Tonne Miles
Countries using kilometers as a measure of
distance use FTK
It is the equivalent of RPM for freight
One Freight Tonne is one metric tonne of
revenue load carried one mile
In conjunction with revenue, this
measurement is also used to calculate yield
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6. FTK/FTM Calculation
Freight Tonne Mile = Revenue load flown *
Miles traveled
Let us define some variables to calculate
FTK/FTM
T = total load of revenue generating freight
D = total distance travelled
FTK or FTM = T * D
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7. Example 2
A freight carrier flies a distance of 2,962
miles. There are 130 tonnes of cargo in the
flight. What is the FTM?
T = 130
D = 2,962
FTM = 130 * 2,962 = 385,060
In this example, the airline has 385,060
freight tonne miles
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8. What is Yield?
Yield measures average earnings made by an
airline by transporting revenue passengers or
cargo per mile/kilometer flown
In case of passengers, Passenger Yield =
Passenger Revenue / Revenue Passenger Mile
In case of cargo, Cargo Yield = Cargo Revenue
/ Freight Tonne Mile
If your currency is USD, then Yield is
calculated in cents per mile
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9. What is Yield?
It is useful in assessing changes in fare over time
Yield is not useful for comparison across markets
and/or airlines
It varies dramatically by length of the route flown (also
known as stage length)
It also does not take into account the percentage of
capacity used (also known as load factor)
It can be calculated using gross or net revenue
figures but here we will use gross figures only
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10. Passenger Yield Calculation
Let us define some variables to help calculate
Passenger Yield
RP = total passenger revenue generated
P = total number of revenue generating
passengers
DP = total distance travelled by the
passengers
Passenger Yield = RP / RPM = RP / (P * DP)
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11. Cargo Yield Calculation
Let us define some variables to help calculate
Cargo Yield
RT = total freight revenue generated
T = total amount of revenue generating load
DT = total distance travelled in transporting
freight
Cargo Yield = RT / FTM = RT / (T * DT)
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12. Example 3
A flight generates revenue of US$ 36,400. It flies
a distance of 2,962 miles. There are 130
passengers in the flight. What is the yield?
RP = 36,400
P = 130
DP = 2,962
Yield = 36,400 / (130 * 2,962) = 36,400 / 385,060 =
0.095
In this example, the airline earned 9.5 cents or
about 9 cents per passenger per mile
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13. Example 4
An aircraft has a first class and an economy
section. There are 12 seats in the first class
section and 108 in the economy. Average fare
per passenger in first class was US$ 690.
Average fare per passenger in economy class
was US$ 345. The aircraft flew a distance of
3,854 miles. What is the yield?
R = (12 * 690) + (108 * 345) = 8,280 + 37,260 =
45,540
P = 12 + 108 = 120
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14. Example 4
D = 3,854
Yield = 45,540 / (120 * 3,854) = 45,540 /
462,480 = 0.098
In this example, the airline earned 9.8 cents
or about 10 cents per passenger per mile
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15. Example 5
An aircraft has a first class and an economy
section. There are 12 seats in the first class
section and 108 in the economy. Average fare per
passenger in first class was US$ 690. Average
fare per passenger in economy class was US$
345. Head sets were given out for free in the first
class. In economy class, head set sale generated
US$ 500. Overall food& beverage sale generated
US$ 1,000. On an average, all passengers paid
US$ 100 extra as fuel surcharge. The aircraft flew
a distance of 3,854 miles. What is the yield?
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16. Example 5
R = (12 * 690) + (108 * 345) + 500 + 1,000 +
12,000 = 8,280 + 37,260 + 500 + 1,000 +
12,000 = 59,040
P = 12 + 108 = 120
D = 3,854
Yield = 59,040 / (120 * 3,854) = 59,040 /
462,480 = 0.1277
In this example, the airline earned 12.77 cents
or about 13 cents per passenger per mile
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17. What is Revenue?
Revenue is generated by transporting either
passengers or cargo or both
Following are considered examples of
revenue for the airline from transporting
passengers
Ticket fares, including fuel surcharge
In-flight sales
Other ancillary revenue like priority boarding,
partnership with shuttle buses, rental cars, hotels,
etc.
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18. What is Revenue?
Following are considered examples of
revenue for the airline from transporting
cargo
Extra or oversized baggage
Freight not linked to a passenger
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19. What is not Revenue?
Following are not considered examples of
revenue for the airline
Taxes, Fees & other charges – While this is extra
money collected from passengers, this is not
counted as revenue as the airline is collecting
them on behalf of the airport and the
Government. So while this adds to the gross
collections by the airlines, it should not be used in
gross revenue collection.
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20. Example 6
An aircraft has 16 seats in first class, 58 seats in
business class and 227 seats in economy section.
Average fare per passenger in first class was US$
7,000, in business class was US$ 4,500 and in
economy class was US$ 1,200.
Passengers in first and business class on an
average checked in 2 bags weighing 23 kilos each
for free. Passengers in economy were allowed
the first bag for free and the second for US$ 60.
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21. Example 6
About 125 passengers in economy paid for
the second bag. The aircraft flew a distance of
15,380 miles.
Assuming no other freight was flown, what is
the passenger and cargo yield?
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22. Example 6
RP = (16 * 7,000) + (58 * 4,500) + (227 * 1,200)
= 112,000 + 261,000 + 272,400 = 645,400
RT = 125 * 60 = 7,500
P = 16 + 58 + 227 = 301
T = ((16 + 58+ 125) * 2 * 23) + ((227 – 125) * 23)
= (199 * 46) + (102 * 23) = 9,154 + 2,346 =
11,500 = 11.5 metric tonne
DP = DT = 15,380
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23. Example 6
Passenger Yield = RP / (P *DP) = 645,400 / (301
* 15,380) = 645,400 / 4,629,380 = .139
Passenger Yield for the airline is 13.9 cents or
almost 14 cents per passenger per mile
Cargo Yield = RT / (T * DT) = 7,500 / (11.5 *
15,380) = 7,500 / 176,870 = .042
Cargo Yield for the airline is 4.2 cents per
passenger per mile
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24. Revenue Passengers
Following are considered revenue passengers
Passengers traveling on published fares
Passengers using publicly available promotional
offers like “Two for one”
Passengers with tickets from frequent flyer miles
Passengers using compensation for denied
boarding
Passengers travelling on corporate discounts
Passengers using preferential fares like
government, seamen, military, youth, student,
etc.
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25. Non Revenue Passengers
Following are considered non revenue
passengers
Passengers travelling free
Passengers using fares or discounts only available
to airline employees or their agents
Passengers travelling on business for the airline
Infants who do not occupy a seat
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26. Example 7
An aircraft has a first class and an economy
section. There are 12 seats in the first class
section and 108 in the economy. In the first class
section of the aircraft, there were 2 airline
executives travelling on company business. In
the economy section, there was 1 person who
was denied boarding in the previous flight.
Average fare per passenger in first class was US$
690. Average fare per passenger in economy
class was US$ 345. The aircraft flew a distance of
3,854 miles. What is the yield?
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27. Example 7
The 2 executives are travelling on airline business so
we have to discount them. The passenger who was
bumped in the previous flight will be considered as a
revenue passenger for this flight.
R = ((12 – 2) * 690) + (108 * 345) = (10 * 690) + (108 *
345) = 6,900 + 37,260 = 44,160
P = 10 + 108 = 118
D = 3,854
Yield = 44,160 / (118 * 3,854) = 44,160 / 454,772 =
0.097
In this example, the airline earned 9.7 cents or 10
cents per passenger per mile
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28. How is Distance calculated?
Airline distance between two points is
calculated by first finding all the points visited
en-route to the destination and then
calculating great circle distances for all the
route pairs
For example, a flight from London to New
York follows a set of points which may include
Navaids, Waypoints, Airways, Departure
routes, Arrival routes, and lat/long fixes
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29. Exercise 1
A flight has two segments. The distance of
the first segment is 10,385 miles. The distance
of the second segment is 4,367 miles. In the
first segment there were 30 passengers in
first class, 60 passengers in the business class
and 326 in the economy class. In the second
segment there were 200 in the economy
class.
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30. Exercise 1
In the first segment, the average fare for first
class was US$ 4,752. The average fare for
business class was US$ 2,567 and for
economy class was US$ 1,135.
In the second segment, the average fare for
the economy class was US$ 702.
Average fuel surcharge for the first segment
was US$ 150 per person. For the second
segment, it was US $80 per person.
What is the overall yield?
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31. Exercise 2
An aircraft has 12 first class seats, 42 business
class seats and 316 economy class seats. In the
economy class there were 4 passengers traveling
on company business.
Average fare in first class was US$ 12,000,
business class was US$ 6,400 while in economy
class it was US$ 850. All ticket prices included
average taxes of US$ 250.
All first and business class passengers checked in
their allowed 3 bags each weighing 23 kilos.
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32. Exercise 2
All Economy class passengers checked in
their allowed 2 bags each weighing 23 kilos.
50 economy passengers checked in an extra
bag each weighing 23 kilos at US$ 70 per bag.
Food & beverage sale generated extra US$
2,000.
The aircraft had flown a distance of 7,880
miles.
What is the passenger and cargo yield?
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33. References
http://en.wikipedia.org/wiki/Revenue_passenger
_mile
http://moneyterms.co.uk/rpk-revenue-
passenger-kilometres/
http://icaodata.com/Terms.aspx#RevenuePasse
nger
http://www.airliners.net/aviation-
forums/general_aviation/read.main/3582373/
http://www.linkedin.com/groupAnswers?viewQu
estionAndAnswers=&discussionID=76033155&gi
d=59519&commentID=55329309&trk=view_disc
&ut=1XhPa6HzrtskY1
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34. References
http://moneyterms.co.uk/ftk-freight-tonne-
kilometres/http://icaodata.com/Terms.aspx#
RevenuePassenger
http://web.mit.edu/airlinedata/www/Res_Glo
ssary.html
http://travel.stackexchange.com/questions/2
695/how-to-calculate-the-air-line-distance-
between-two-places
http://www.aa.com/i18n/amrcorp/corporateIn
formation/facts/measurements.jsp
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35. Appreciation
Dirk Albrecht, Partner, Head of Aviation
Practice, Roland Berger Strategy Consultants,
Belgium
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