Available Seat Miles - ASM
Categories: Company Management
ASM is used to calculate the total notional miles that an airline can take its passengers in a given period of time, usually a quarter or a year. It's a measure of capacity for airlines. The figure is derived by multiplying the number of miles an airplane travels by the number of seats in the plane (so it's the number of total miles traveled by every seat the airline has...so if an airplane has 200 seats and traveled 1,000 miles, its ASM is 200,000).
Some people also try to use ASM as a proxy for the total theoretical revenues an airline can generate. But in practice, that's not at all how things work.
See, certain routes are highly competitive (think New York to San Francisco) and cover a lot of miles. So per mile, they're cheap. Other routes, like Santa Barbara to Jackson Hole, are rare, not highly contested, and thus, usually very expensive. So, ASM is a not relevant test of potential revenue when comparing a niche local geographic airline with, say, United Airlines, because they fly such different route miles. But a comp between American Airlines and United? Maybe that works.
Regardless, ASM is one of many metrics the airlines use to try and explain to investors why they've been such a horrible investment for so many decades and yet continue on today.
