Break-Even Load Factor

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Utah Valley University *

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2090

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Industrial Engineering

Date

Oct 30, 2023

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docx

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1

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Uploaded by BailiffBadger138

LF B E = CASM RRPM , RRPM = ASM ×CASM RPM Scenario 1: Small Airline ASM = 10,000,000 miles RRPM = 10 cents per RPM CASM = 8 cents Break-even load factor (%) = (0.08 / 0.10) * 100 = 80% Scenario 2: JetBlue Airways ASM = 37,332,000,000 miles Yield = 13.29 cents per mile CASM = 11.17 cents per mile Break-even load factor (%) = (0.1117 / 0.1329) * 100 = 84.05% Scenario 3: Southwest Airlines ASM = 98,437,092,000 miles Yield = 12.3 cents per ASM CASM = 11.29 cents per ASM Break-even load factor (%) = (0.1129 / 0.123) * 100 = 91.79% The brake-even load factor for the three airlines is 80%, 84.05%, and 91.79%, respectfully. Therefore, all three airlines above are not breaking even. To break even, these airlines should adjust ticket prices, reduce operating costs, optimize load factors, and expand routes to increase revenue.
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