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Author Topic: Yield / RPK  (Read 9926 times)

diontheo

  • Former member
Yield / RPK
« on: April 23, 2010, 07:28:28 PM »
What does this represent?

Thank you!

Offline TK1244

  • Members
  • Posts: 1245
Re: Yield / RPK
« Reply #1 on: April 23, 2010, 07:36:24 PM »
Just read the announcement here
TK Regional

MattDell

  • Former member
Re: Yield / RPK
« Reply #2 on: April 23, 2010, 08:16:28 PM »
How do we interpret this?  I have flights that are high in profit but with low / RPK.  Does this mean they're not as profitable as I thought?

-Matt

cwestah

  • Former member
Re: Yield / RPK
« Reply #3 on: April 23, 2010, 11:03:12 PM »
yield represents the revenue of each passenger per mile. you're more likely to have a high yield on shorter flts than long haul, you're more likely to have a low yield on high competitive routes e.g. I wouldn't concern too much about it, but i can be smart to use as a tool to test your price elasticity e.g.

nlgravity

  • Former member
Re: Yield / RPK
« Reply #4 on: April 24, 2010, 03:50:45 AM »
yield represents the revenue of each passenger per mile. you're more likely to have a high yield on shorter flts than long haul, you're more likely to have a low yield on high competitive routes e.g. I wouldn't concern too much about it, but i can be smart to use as a tool to test your price elasticity e.g.

That is a very smart quote and observation. Indeed I find the Y/RPK to be an indicator of Px elasticity NOT an indicator of route profitability. The only way to get use of it is by changing the price and monitoring the ratio. You reach equilibrium when the ratio peaks (even if your LF% decreases).

Klcosta

  • Former member
Re: Yield / RPK
« Reply #5 on: April 24, 2010, 06:06:41 PM »
yield represents the revenue of each passenger per mile. you're more likely to have a high yield on shorter flts than long haul, you're more likely to have a low yield on high competitive routes e.g. I wouldn't concern too much about it, but i can be smart to use as a tool to test your price elasticity e.g.

I am still extremly confused, what is this whole price elasticity thing? how can we use this new feature to shift prices?

Offline ehcydotcom

  • Members
  • Posts: 58
Re: Yield / RPK
« Reply #6 on: April 24, 2010, 06:33:19 PM »
You need to study economics to understand the whole thing. Equilibrium is about the price at which supply equals demand. Is very hard to explain the whole thing.

Klcosta

  • Former member
Re: Yield / RPK
« Reply #7 on: April 24, 2010, 11:34:29 PM »
So does it mean that high/darker green means it would be okay to raise the price and yellow and low that we should probably lower it?

cwestah

  • Former member
Re: Yield / RPK
« Reply #8 on: April 25, 2010, 12:52:47 AM »
I am still extremly confused, what is this whole price elasticity thing? how can we use this new feature to shift prices?

price elasticity shows you how much your demand reacts to a change in price.

in finance\economics we're using this to forecast the effects of a change in produced quantity or price...
elastic demand: if a 1% decrease in price leads to a 1%plus increase in demand
inelastic demand: if the increse is less than one.

Equilibrium explains balances in both maths and economics, in micro economics it describes the optimal price where qty demanded and qty supplied are equal.
« Last Edit: April 25, 2010, 01:03:56 AM by cwestah »

cwestah

  • Former member
Re: Yield / RPK
« Reply #9 on: April 25, 2010, 01:03:37 AM »
So does it mean that high/darker green means it would be okay to raise the price and yellow and low that we should probably lower it?


not at all. rather the opposite, but not necessarily. yellow\red means that your revenue per pax\nm are fairly low. a lot of airlines have a very low yield and are using it deliberately as a part of their strategy and are still profitable. specially low cost airlines (this is often supported by a low cost operation structure), airlines starting operations on a new route, as defense against competition on an existing route e.g. green means that earnings per pax\nm are fairly good.
« Last Edit: April 25, 2010, 01:07:46 AM by cwestah »

Free Will

  • Former member
Re: Yield / RPK
« Reply #10 on: September 23, 2011, 11:29:00 PM »
price elasticity shows you how much your demand reacts to a change in price.

in finance\economics we're using this to forecast the effects of a change in produced quantity or price...
elastic demand: if a 1% decrease in price leads to a 1%plus increase in demand
inelastic demand: if the increse is less than one.

Equilibrium explains balances in both maths and economics, in micro economics it describes the optimal price where qty demanded and qty supplied are equal.


WOW!

 :laugh:

Offline joyseng

  • Members
  • Posts: 374
Re: Yield / RPK
« Reply #11 on: September 28, 2011, 03:52:51 AM »
Thanks for all the sharing.

So in summary, am I correct that I should most possibly lower the prices of my routes of very high yield c/ RPK to increase passenger load (if the passenger load has still much space to increase) so as to eventually increase profit? On the other hand, am I correct that I should most possibly increase the prices of my yellow and red routes to increase my profit?

Just checking on general terms since we do not operate budget airlines, and most of my routes are not new and non-competitive. Or is there another way that I should use these numbers?

By the way, is the other term of Revenue, c/RSK explained somewhere else in the Forum? I am just as ignorant to what this means too.

Thank you.

Offline alexgv1

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Re: Yield / RPK
« Reply #12 on: September 28, 2011, 10:29:43 AM »
Hello joyseng,

Although you have interpreted RPK and ASK figures correctly, it is generally better to not change your prices from default, because as yet it does not play a major role in competition, nor do you usually end up any better off selling more tickets more cheaply. These will be rectified when the pricing structure is changed and the competition formula is tweaked to take away emphasis on frequency.

Hope this helps.
CEO of South Where Airlines (SWA|WH)

Offline joyseng

  • Members
  • Posts: 374
Re: Yield / RPK
« Reply #13 on: September 28, 2011, 05:35:30 PM »
Alexgy:

Thanks alot for the information. Yes, I have raised prices by 10% for a few routes to test it out and was surprised to see that their passenger loads dropped greatly. However, things have been back to normal after I have changed the prices back to default.

So how can the information of Yield c/ RPK helps us to make decision? Also, can you kindly share what is Revenue, c/ASK?

Thank you.

Offline alexgv1

  • Members
  • Posts: 2184
Re: Yield / RPK
« Reply #14 on: September 28, 2011, 06:00:09 PM »
ASK is availible seat kilometers, which is like RPK but includes empty seats. So Revenue/ASK is Yield/RPK multiplied by the passenger load factor. Similarly, load factor is worked out by dividing ASK by RPK to give a percentage.

Yield shows how lucrative a route is, in that a short high fare route will have a high yield because you can fly many passengers a short distance to earn decent money. Flying further to earn the same money would reduce the Yield.

CEO of South Where Airlines (SWA|WH)

 

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