A load factor is a measure of operating efficiency used by air carriers to determine a plane’s utilized capacity percentage or the number of passengers divided by the total number of seats. The average industry load factor has been about 80% over the past few years. This means that for every 10 seats on an airplane, 8 are filled with paying customers.
There are a variety of reasons why load factors fluctuate including:
- changes in demand (fewer people traveling during winter months, for example),
- economic conditions,
- pricing, etc.
Airlines closely monitor their load factors as it is a key metric in terms of profitability – the higher the load factor, the more efficient an airline is considered to be.
From a logistics perspective, the load factor is also an important consideration. For example, when shipping goods by air, the load factor will have an impact on the cost of shipping as airlines charge per kilogram of cargo. A lower load factor means that there is more space available on the plane and therefore, a lower cost per kg to ship goods.
Thus, the load factor is an important metric for both airlines and logistics providers to keep track of in order to ensure profitability and optimize costs.