|Quoting Curmudgeon (Reply 13):|
Actually, this is true, or nearly so. CASM only paints a relative picture of an airplane's efficiency over routes that it is capable of flying. If the demand or price on the route is too low, the lowest CASM in the world won't make a profit.
An old rule of thumb on any route was that 80ish % was the maximum sustainable load factor before a bigger airplane or more frequency was required. (because over 80% meant that you were turning away as many customers as you accommodated, given uneven demand)
Well, yes and no. True, both CASM and RASM are based on all the seats filled. Yield, the only important number, is based on the actual cost of the flight (there is a slight difference in fuel burn if the aircraft is lighter) and actual revenues for that flight (how many paying customers, what discounts, what secondary sales such as seat selection, baggage checking, etc). However, taking both CASM and RASM and scaling both according to the average load factor gives a rough idea what the yield will be.
You can also take the cost and revenue numbers of an airline from their financial reports and get a good idea of what their break-even load factor is. I have done this a year ago with both EI
and found FR
had a break-even load factor of about 60% while EI
was closer to 75%. These numbers are no longer valid as there have been very substantial changes to fuel costs as well as secondary charges such as baggage fees. But if you have the annual reports, you can get a rough idea..
As for the 80% rule, it would be far better to increase frequency as the flying public is more likely to pay more for a flight scheduled when they want to go than not. And if you see a drop in volume, you can reduce the frequency. This of course assumes that the smaller aircraft has a CASM similar to the large one, much as the 787 and 350 are about the same CASM as the 380 and 748, and better than the 777,
The economics of airline travel are very complex, and ever changing. Glad I don't own airline stock.