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# Aircraft Cost Operating Cost

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gliderpilot posted on Thu, Feb 25 2010 2:35 PM

What is the difference between aircraft cost operating cost on a per-trip basis and a per seat/mile basis? What is accounted for in each metric?

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flyvertosset replied on Fri, Nov 12 2010 1:47 AM
Suggested by flyvertosset

The Cost Per Available Seat Mile (CASM), a commonly used unit cost used to calculate cost. CASM is expressed in cents to operate each seat mile offered, and is determined by dividing operating costs by Available Seat Miles. This number is frequently used to allow a cost comparison between different aircraft. A lower CASM means that it is easier for the airline to make a profit, as they have to charge less to break even. A low CASM, however, is by no means a guarantee of profitability.

For instance, Southwest flies from Baltimore Washington International (BWI)to La Guardia International (LGA) and the distance is 185 Miles / 161 Nautical Miles between the origin and destination. Southwest is operating this flight with a B737-700 (140 seat max) aircraft, and it cost Southwest \$2,700 for this flight (Direct Operating Cost) often referred to as DOC in aviation. To calculate the CASM,

CASM = Direct Operating Cost / Available Seat Mile = \$2,700 / (140 x 161 = 22,540) Where 140 is the number of available seats and 161 is the distance in miles . = \$2,700 / 22,540 = 0.1197 or 12 cents per mile It would cost Southwest \$0.12 per seat per mile for a flight to New York. In addition, the cost for each seat for total miles would be

Seat Cost = \$0.12 x 161 miles = \$19.32. It cost Southwest \$19.32 per seat to New York.

I can get that flight for a one way fare of \$69.70 without tax which tell me that if the flight is full Southwest makes 69.70 - 19.32= 50.38 for each seat making a profit of \$ 7053.20 on a one way flight. I cannot guarantee the DOC is a 100% correct and it will be hard to wrestle that figure out of Southwest.

Here is an interesting study of an airline who lasted less than a year:

http://en.wikipedia.org/wiki/Skybus_Airlines

Gravity always wins!

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