Available Seat Kilometres (ASK)

Available Seat Kilometres (ASK) is the fundamental measure of an airline's passenger-carrying capacity. Think of it as the total “product” an airline has available to sell over a given period. It's calculated by taking the number of seats available for sale on an aircraft and multiplying it by the distance that aircraft flies in kilometres. For investors focused on European or international airlines, ASK is the standard unit of measurement for capacity. Our friends across the pond in America often use a similar metric called Available Seat Miles (ASM), which simply substitutes kilometres for miles. Understanding ASK is the first step to unpacking an airline's operational performance, as it forms the denominator for many of the industry's most critical performance indicators. It tells you the scale of an airline's operation—how much “shelf space” it has created in the sky.

The calculation is refreshingly simple. You can calculate the ASKs for a single flight and then add them all up to get the total for an entire airline over a month, quarter, or year. The formula is: ASK = Number of Available Seats x Distance Flown in Kilometres Let’s imagine a flight from Paris to Rome, a distance of roughly 1,100 km. If the airline uses an Airbus A320 with 180 seats for this route, the ASKs for this single flight would be: 180 seats x 1,100 km = 198,000 ASKs An airline reports the grand total of all its flights. So, if it flies that same route once a day for a 30-day month, that route alone would contribute 5,940,000 ASKs (198,000 x 30) to its monthly total.

On its own, ASK just tells you the size of an airline's capacity. Is a big number good? Is a small number bad? It's impossible to say without more context. The magic happens when you use ASK as a building block to understand an airline's health and efficiency. It’s the 'per share' equivalent for the airline world, allowing you to compare performance over time and between different airlines.

If ASK represents the supply (the seats available), then Revenue Passenger Kilometres (RPK) represents the demand. RPK measures how many of those available seat-kilometres were actually sold to paying passengers. It's calculated by multiplying the number of paying passengers by the distance flown. By comparing RPK to ASK, you get a clear picture of how much of the airline's “inventory” was sold.

This brings us to one of the most-watched metrics in the airline business: the Passenger Load Factor (PLF). It's the percentage of available seats that were filled with paying passengers. The formula is: PLF = RPK / ASK A load factor of 85% means that, on average, 85% of the airline's available seats were sold. A high load factor is generally a sign of strong demand and efficient capacity management. However, a savvy investor knows to ask how that high load factor was achieved. Was it through strong pricing power, or did the airline have to slash ticket prices to fill its planes?

ASK is also the key to understanding an airline's unit economics—how much it costs to operate and how much revenue it earns for every unit of capacity it deploys.

• Cost per Available Seat Kilometre (CASK): This is the airline's total operating cost divided by its total ASKs. It tells you the cost of flying one seat for one kilometre, whether it's empty or full. A lower CASK means a more cost-efficient airline, which is a huge competitive advantage in this cut-throat industry. Value investors often look at CASK ex-fuel to strip out the volatility of oil prices and get a better look at management's control over core costs.
• Revenue per Available Seat Kilometre (RASK): This is the airline's passenger revenue divided by its total ASKs. It measures the revenue generated for every seat-kilometre offered. A higher RASK indicates stronger pricing power and a better ability to monetize its capacity.

For a value investor, ASK is never a standalone number to admire. It is the foundation upon which a proper analysis of an airline is built. When you see an airline's ASK figure, your first questions should be:

• Is it growing? An increasing ASK means the airline is expanding its fleet or flying its planes more.
• Is the growth disciplined? Is the growth in demand (RPK) keeping pace with the growth in capacity (ASK)? If ASKs are growing faster than RPKs, the load factor will fall, suggesting the airline expanded too aggressively.
• How does it affect unit economics? As the airline grows, is it able to lower its CASK through economies of scale? Or are its costs spiralling? Is it able to maintain or increase its RASK, or is the expansion forcing it to cut prices?

By analyzing the trends in ASK and its relationship with RPK, CASK, and RASK, you can move beyond the headlines and build a true understanding of an airline’s operational and financial health. This is how you spot a well-run, efficient operator from a company simply flying on fumes.