Can we stop harping on the CASM here? CASM is such an overrated number. What is the total cost of running the flight vs. total potential revenue on that flight. Total cost, not averaged out to CASM. An A330 is going to have a lower CASM than an ERJ, but are you going to to put an A330 on a 350NM flight that averages only 35 passengers a flight? Total cost vs. revenue gives you what you really need to look out, profit or loss.PITbull said:
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- Thread starter ITRADE
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Total cost and total revenue are completely useless when comparing airlines. The only way to make appropriate comparisons is to do a weighted comparison. The simplest method of weighting is by ASMs, hence CASM and RASM.
Sure, revenue has to be more than cost. So, in your example of the A330, the CASM is lower than for the RJ...but the RASM is much lower, since the R has to be amortized over a much larger number of ASMs. It works.
The reason the RJs don't make sense is that they're being used to displace 737s on routes with sufficient demand to use a 737. That doesn't make sense. RJs are fine in markets that are too small to support a 737 in the first place...provided the customers in those markets are willing to pay for the service in the first place.
Sometimes you end up with a market that is too small to support a 737, so you want to put an RJ in there...but the customers that would fill the RJ won't pay the necessary fare to make the RJ profitable, so the market shrinks further. Eventually, the RJ gets replaced with a Saab, but the tiny handful of customers that were willing to pay the RJ fare won't touch the route at a fare that makes the Saab profitable. And so the market becomes unserved altogether.
Sure, revenue has to be more than cost. So, in your example of the A330, the CASM is lower than for the RJ...but the RASM is much lower, since the R has to be amortized over a much larger number of ASMs. It works.
The reason the RJs don't make sense is that they're being used to displace 737s on routes with sufficient demand to use a 737. That doesn't make sense. RJs are fine in markets that are too small to support a 737 in the first place...provided the customers in those markets are willing to pay for the service in the first place.
Sometimes you end up with a market that is too small to support a 737, so you want to put an RJ in there...but the customers that would fill the RJ won't pay the necessary fare to make the RJ profitable, so the market shrinks further. Eventually, the RJ gets replaced with a Saab, but the tiny handful of customers that were willing to pay the RJ fare won't touch the route at a fare that makes the Saab profitable. And so the market becomes unserved altogether.
RowUnderDCA
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- Oct 6, 2002
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Can anyone explain to me why you'd want to fly only EMBs to IAH? Surely, U has enough guts to try to fill up a 73. And what about first class? Is it an aircraft shortage?
OP
ITRADE
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- #34
Actually, I did hear that there was an aircraft shortage of sorts:
That all available OW A320 series craft are already in service, and additional Caribbean expansion is going to require additional planes or the return of 734s with OW abilities.
I think 700UW mentioned this some time ago - or AOG-N-IT.
That all available OW A320 series craft are already in service, and additional Caribbean expansion is going to require additional planes or the return of 734s with OW abilities.
I think 700UW mentioned this some time ago - or AOG-N-IT.
