Originally Posted by FlyPurdue

CASM is the cost to fly one seat, one mile, normally expressed in cents. RASM is the revenue earned by flying that same seat one mile. In very basic terms, RASM-CASM=Profit. It is important to note that there are many different metrics that have to be considered when calculating or evaluating flight, network, and overall company profitability.

The traditional thinking is, the more seats you have on a plane, the more revenue opportunity you have, and concurrently more seats means more passengers, and thus more opportunity to offset the flight's cost. Most of an individual flight's overall cost is fixed and not related to how many passengers are actually onboard, such this idea makes sense.

That being said, what is becoming more and more apparent across the industry, is that some people are willing to pay a lot (sometimes $10,000+) more for their ticket, whether they desire added flexibility, more room, or a gourmet meal - the notion of just maximizing the seat count is not necessarily the best practice anymore in maximizing revenue. Thats what I think United sees in the CRJ-550. They know that people flying to Bentonville are not purchasing basic economy fares, and are betting on the CRJ-550 in shifting high yielding passenger market share from DL/AA - and that loss of seating density is just the cost of doing business. Additionally, UA gets to add EMB175s, which will further increase system profitability. Finally, whoever mentioned that Scott is using this to show Wall Street that there will be no scope relief I think is spot on too.

I saw this video earlier - this could help explain some of these concepts too.

https://www.youtube.com/watch?v=BzB5xtGGsTc