11 August 2008

So how deep are the cuts? A Primer.

We have been tracking the extent of the cuts in Airline services and the numbers seem to be all over the map. It is going to be difficult to see where the real cuts occur depending on the source.

So for the benefit of the un-initiated - let me just make a few statements as terms of reference.

There are essentially 2 elements that make up the raw components of what comprises the term "traffic" these are:
1. Aircraft. Type, Size, seating capacity
2. Routes flown and frequency. The aircraft takes off and lands each take off and landing is tracked differently. An aircraft "movement" comprises for airport a single event - a take off or a landing. Thus there needs to be one of each to comprise a pair. Airports measure the aircraft by type (not capacity) and by the number of movements.

There is a host of different measurements that comprise what is included in these elements. Frankly some of them are extrapolated and some are averages. For example a Delta B737-800 may be pretty different from a Ryanair B737-800. Airlines calculate capacity typically by taking the number of seats available and then how many seats are flown. These are called ASMs Available Seat Miles, also known as ASKs with the unit of distance being a Kilometer. The number of passengers filling those seats are RPMs - Revenue Passenger Miles (also RPKs). The load factor takes the RPMs divided by the ASMs to give you a load factor. NOTE that this is where the airline gets passenger revenue. So that if a person is flying on company business (such as an airline crew deadheading) then this is not included. Also if you are flying on an award ticket for free (i.e. no passenger revenue then you are also not included in this number. This is why frequently the load factor number underestimates the actual capacity of the aircraft. With the airlines going to ancillary revenue and now charging for FF "free" tickets perhaps that number needs to be rethought.

I have always thought that the measurement of RPMs vs ASMs to be somewhat false. But the airlines frequently translate things into CASMs - COST per ASM as a measurement component of their profitability.

As there is no universal form of translation and the airlines do not want to break out their premium traffic statistics into exact detail - we do not have precise numbers by cabin available.

For a carbon footprint, we are now seeing a measurement that shows that the footprint share by passenger should rightly be apportioned to the unit of space in the cabin. Thus the amount of personal space available to a Coach passenger is frequently less than 50% of that of a premium class passenger.

So this should help you to put in perspective the relative measurements being touted by the various parties of the different statistics on the cutbacks.

IATA is claiming as is OAG that there are total cuts of the order of 7%. This is based on aircraft capacity cuts flight numbers x aircraft types. The airports are claiming a much lower cut and indeed still showing positive Y/Y growth for all of 2008.

So bear this in mind when you are looking at the numbers and look behind the statements and see if you can actually see the real numbers underneath.

Good luck interpreting - we will be searching this for you but perspective is always good.



1 comment:

John S said...

This is great - a real service to the community-at-large. You should forward or link this to many of the popular aviation media, major outlets, and other pundits. We would all be better off applying a better filter to statistical claims.

By stepping back to understand the morass of data and add some perspective, we might achieve more dialogue and better service without unnecessary pressures brought on by confusing influences.