Some Important Terms of

Aviation

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 Virtual Airline
• A Virtual Airline in economics refers to an airline that
has outsourced as many possible operational and business
functions it can but still maintains effective control of its
core business. Such an airline focuses on operating a
network of air services, and outsourcing non-core activities
to other organizations. Contracting out services within the
aviation industry has reportedly become so common that
many carriers could be classed as having features of a
Virtual Airline, although it is arguable whether any current
carriers meet a strict definition of the term.

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 Elasticity
• “Price elasticity of demand.” That ratio is defined
as the percent change in quantity of air travel in
response to a percent change in the price of air
travel. For example, in a given city pair, if a 10%
increase in the price of air travel caused a 10%
reduction in the number of passengers, the price
elasticity of demand would be -1.0. The ratio may
vary by market segment, trip purpose, and other
factors. It also may be influenced by the
availability of substitutes to commercial air travel
(e.g., videoconferencing, bus, car, train, private
jet)
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LCC : Low-Cost Carrier
• Also known as low-cost airline (a
no-frills or discount carrier /
airline) is an airline that offers
generally low fares in exchange for
eliminating many traditional
passenger services.
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BILATERAL AGREEMENT

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 ACMI
Aircraft, Crew, Maintenance and Insurance

Damp Lease: An ACMI without crew. Lessee will provide crew.

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• Damp Lease: An ACMI without crew. Lessee will
provide crew.
• Dry Lease : An agreement between two parties
whereby lessor provides only the aircraft and lessee
provides maint, crew, fuel, insurance, tax, fees and
so on as required for operations.
• Wet Lease: Lessor provides aircraft & crew. Other
aspects: maint, insurance, fuel, grnd svc are
negotiated.
• Operating Lease: generally a lease term that is for
a short term of 2-7 years. compared to the
economic life of the aircraft being leased.
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 CODE SHARE
• Code sharing: An agreement between airlines to
sell space on each other's flights

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• Finance Lease: also known as a capital lease,
is defined when on of the following conditions are
met:-
• at the end of the lease term the LESSEE has the
option to purchase the aircraft at an agreed price.
• the lease payments are more than 90% of the
market value of the aircraft.
• the term of the lease is over 75% of the aircraft's
usable life.
• With a finance lease the aircraft appears on the
LESSEE's balance sheet, as it is viewed as . a
purchase

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• Block Hour
Time from the moment the aircraft door closes at
departure of a revenue flight until the moment the
aircraft door opens at the arrival gate following its
landing. Block hours are the industry standard measure
of aircraft utilization (see above).
• Stage Length
The average distance flown, measured in miles, per
aircraft departure. The measure is calculated by
dividing total aircraft miles flown by the number of
total aircraft departures performed.

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• Deferred Rate: An air cargo rate that is lower
than the corresponding standard rates for a
comparable shipment. Shippers using a deferred
rate agree in advance to a lower level of service in
return for the reduced rate.
• Direct Op Cost: All cost incurred in operating an
aircraft incl its cost of ownership.
• Indirect Op Cost: All cost incurred whether
aircraft is operated/flown or not. Insurance, rent,
admin, marketing

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• Available Tonne Mile/Km: Measure of airline
or aircraft cargo capacity and production.
Calculated as the product of total cargo payload
capacity and distance flown.
• Freight Tonne Kilometer, FTK representing 1
tonne of cargo carried 1 kilometer. It’s a
worldwide standard of measure for the amount of
traffic moved.
• Average Daily Flt Hr Utilization: Represents
average number of hours of flt flown in scheduled
service per day per aircraft for the total fleet of
the operated aircraft.
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• Operating Revenue
Revenues received from total airline
operations including scheduled and non-
scheduled service. Sources of revenue
include passenger, cargo, excess baggage
and certain other transport related revenue.
• Passenger Revenue.
Revenue received by the airline from the
carriage of passengers in scheduled
operations.
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• Available Seat Mile (ASM) / Kilometer (ASK)
One seat flown one mile. An airliner with 100 passenger
seats, flown a distance of 200 miles, represents 20,000
available seat miles (ASMs).
• Cost per Available Seat Mile (CASM)
Measure of unit cost of total services provided,
expressed in cents. CASM is calculated by taking all of
an airline’s total operating expenses or cost and
dividing it by the total number of Available Seat Miles
(ASM) produced in a given period.

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Revenue Passenger Miles / km (RPM / RPK)

This is basic measure of airline pax traffic. It

reflects how many of an airline's available seats
were actually sold. One revenue paying pax
flown one mile /km. RPM = (# of revenue
paying pax) X (# of miles/km they have flown
during period). For example, in a 180-seat plane
if 140 pax fly 500 miles on a flight, then
RPM = 140x 500= 70,000
ASM = 180x500=90,000
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 Revenue per Available Seat Mile (RASM)
Also called "unit revenue," this figure is calculated
by dividing the airline’s total revenue by all the
available seat miles. How much revenue an airline
is receiving per seat in its system expressed in
cents. A measure of price computed as Total
Operating Revenue divided by Available Seat Mile
(ASMs). Unlike Yield, RASM captures amount
of revenue an airline receives for each unit of
capacity it supplies in market.
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– Pax Load Factor: The % of seats available
that are actually purchased by pax. Measures the
percentage of available seating capacity that is
filled with revenue pax. e.g. A flt with 135 seats,
105 of which are occupied by revenue pax has
a load factor of 77.8%. A measure of capacity
utilization computed as : RPM/ ASM for the
whole system or specific route or flt.
Alternatively an airline which supplies 4.2 billion
ASM , generates 3.1 billion RPM over a given
period has a system Load Factor of 73.8%.
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 Break–even Load Factor: Represents the number of
RPMs (Rev Pax Mile) at which scheduled pax revenue would
be equal to operating expenses.

Seat Density
Average seating configuration of an airline’s
operating fleet. The measure is derived by dividing
total available seat miles ASM flown by the number
of aircraft miles flown. It is average aircraft size as it
is an important determinant of employees needed to
service operation of a particular airline.
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• Passenger Yield
Measure of average fare paid per mile, per pax. It is
calculated by dividing Pax Revenue by Revenue Pax
Miles (RPM), presented in cents / mile and is useful
measure in assessing changes in fares over time for a
route or system wide. Yield is not useful for
comparisons across markets and/or airlines, as it
varies dramatically by stage length and does not
incorporate load factor (unlike PRASM). A route
which generates $ 500,000 rev and 4 million RPMs in
a given month has Yield of 12.5 cents.
• Cargo Yield: Air Tpt Rev per unit of wt & distance.

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 Cargo Load Factor
Revenue tonne-kilometers (RTK) divided
by available tonne-kilometers (ATK). It is
the ratio of actual cargo load by wt to the
available cargo wt capacity. It may be
calculated on basis of wt, volume, unit
loading device capability. On pax aircraft,
cargo capacity excludes the space meant
for pax- baggage.

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CARGO LOAD FACTOR

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Break-Even Load Factors (BELF)

• Every airline has a BELF. It is percentage of

seats the airline has in service that it must sell at
a given yield, or price level, to cover its costs.
• Escalating costs push up BELF, while
increasing prices for airline services have just
opposite effect, pushing it lower. Overall, BELF
in recent years has been approx 66 %.
• Sale of just one or two more seats on each flt can
mean difference between profit and loss for an
airline.
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 Revenue per Employee

• One measure to determine an airline’s labor

productivity. It is calculated by dividing an
airline’s total revenue by the number of
airline employee full-time equivalents as
reported to the US Department of
Transportation

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1. Air Traffic Liability (ATL) An estimate of the
amount of money already received for passenger
ticket sales and cargo transportation that is yet to
be provided. It is important to find out this figure
so you can remove it from quoted revenue figures
(unless they specifically state that ATL was
excluded).

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 Line Maintennce

• Routine servicing, trouble shooting, and

maintenance corrective actions reqd for
airplane dispatch. Line Maint gen incl
transit checks, daily checks, and service
checks, all of which are traditionally called
the “A” –check. Aircraft goes through the
`A' Check every 350 to 650 hours which is
about once a month.

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 ‘A’ Check
• This is performed over night approx
every month. Actual occurrence of this
check varies by aircraft type, cycle
count (takeoff and landing is
considered an aircraft "cycle"), or
number of hours flown since last
check. Occurrence can be delayed by
airline if certain predetermined
conditions are met.500 Flt Hrs (FH).
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 B’ Check
• This is performed approximately every 3
months. This check is also usually done
overnight at an airport gate. A similar
occurrence schedule applies to the B check
as to the A check.

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 C’ Check
• This is performed approximately every 12-18
months or 2500 Flt Hrs (FH). C’ check puts
aircraft out of service and requires plenty of space
- usually at a hangar at a maintenance base.
Largest maintenance exercise `C' Check involves a
thorough inspection of aircraft structure with
system tests. While for each A-320 aircraft a `C'
check costs between $300,000 and $500,000, for
bigger aircraft of Air India cost can go up to $1.5
million per aircraft. 2007

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 D’ Check
General overhaul of aircraft, is done once in 5 to 10
yrs depending upon age and flt history. It requires
about 60,000 man-hrs of labour for ac like Boeing
747-400. Before overhaul, it would have spent six
yrs in intercontinental svc, clocked more than
30,000 flt hrs and flown a distance of some 15
million miles, equivalent of more than 30 trips from
earth to moon and back. It more or less, takes
entire
airplane apart for inspection. This requires even
more space and time than all other checks, and33
must be performed at a maint base. 2007
BASE MAINTENANCE

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GUARANTEED ENGINE MAINTENANCE

• PROGRAMS --They are known by names such as

"ESP", "MSP", "JSSI Complete", "Power-by-the-
Hour", but they all have one thing in common --
comprehensive turbine engine
maintenance and overhaul coverage at a fixed
price per hour. This coverage is now
offered by almost all of the major turbine engine
manufacturers, as well as one
independent company. They are available for
almost all engines in common use on
helicopters, turboprops and jets.

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• Cabotage
• Airline cabotage is the carriage of air traffic
that originates and terminates within the
boundaries of a given country by an air
carrier of another country.

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• Combi
• Aircraft where the main deck is equipped
for both the transportation of passengers
and cargo. The freight is stored at the back
of the aircraft and is accessed by a
specially-fitted cargo door.

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• Lower ULD: A unit load device ULD
( pallet or container) carried in lower
deck/hold/lobe cargo compartment. These
units are commonly designated with an LD
prefix, plus a number such as LD-1 .

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Freedoms
• The right of an airline, obtained through bilateral
agreements, to operate in the airspace and on the
territory of a country other than its home country.
Fuel hedging
• Financial mechanism aimed at protecting Airline
company from risk involved in increased fuel
prices. Involves purchasing a fixed quantity of
fuel prices. Involves purchasing a fixed quantity
of fuel on a certain date and at a pre-determined
price.

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 FLOW PAX

• A Pax is a Flow Pax or Connecting Pax

between city pairs which do not incl
origination & destination city. e.g A pax
traveling from Boston & San Francisco
with a connection in Chicago is a Flow
Pax between Boston & Chicago and
Chicago & San Francisco.

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 Frequent-Flyer Programs

• Airline marketing programs designed to win

customer loyalty by giving them "points"
for each mile flown. Points can be cashed in
later for free flights or upgrades in cabin
service, or in some instances, non-airline
services or items.

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• Point-to-point traffic
• Traffic between two airports excluding all
passengers taking a connecting flight.
• Premium class
• Front section of the aircraft (or upper deck
of a Boeing B747), where "high yield"
passengers are seated, such as first or
business class passengers.

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 Seat Pitch

• The distance between the rows of

seats and is measured from the back of
one seat to the back of the seat behind,
the measurements being taken from
the same position on each seat.

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 HUB
It is an airport where one or more airlines
organize a substantial number of departures
in concentrated banks to facilitate
connecting traffic flows. The result is a
wide array of flts not only for connecting
pax, but also for local pax, who benefit
from significantly more flts than warranted
by local demand alone.

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Airbus 380

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Airbus 380

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 Overbooking
• In seeking to maximize revenue across
their networks and serve as many
passengers as possible, airlines sometimes
overbook flights, meaning they book
more passengers than they have seats on a
given flight. This in part is done to
account for passenger “no-shows.”

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 CARGO AC
• All-cargo carriers, called freighters, carry
only freight, mail and express packages.
Freighters are, most often, pax jets that have
been stripped of their seats to maximize
cargo-carrying capacity. Their decks are
reinforced to accommodate heavier loads,
and they typically have other cargo-
handling features, such as rollers built into
the floors, extra-large doors, and,
sometimes, hinged nose and tail sections.
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