What’s Load Factor ? [Operations Management]

[Ref. The Global Airline Industry Edited By Peter Belobaba, Amedeo Odoni and Cynthia Barnhart © 2009 John Wiley & Sons, L td. ISBN: 978-0-470-74077-4]

Load factor is the ratio of traffic to output – i.e RPK to ASK, which representing the proportion of airline output that is sold or consumed:

Load factor = Traffic / Output (capacity)

Load factor (network/system) = ALF = RPK/ASK

Load factor (leg) = ALLF = Num. of paid passenger / Num. of seat available

Actually, we need to know that “RPK = Num. of paid passenger x KM traveled” and “ASK = Num. of seat available x KM traveled”. Therefore, load factor can be simply describe as Num. of paid passenger divided by Num. of seat available. For example, a flight has 140 paid passenger and the flight can offer 200 seats. Then, the load factor would be 140/200 * 100 = 70%.

Indeed, an airline operates many flights, each flight has its own aircraft configuration and distance flown, the load factor is better represented by an average approach – Average Leg Load Factor (ALLF); In an other way, airlines can take the Average Network or System Load Factor (ALF)

Here, we should be aware that the ALLF and ALF may be slight different!

ALLF (average leg load factor) is more appropriate for analysis of demand to capacity or passenger service levels on a series of flight leg departures – e.g demand of a route over a month;

ALF (average network/system load factor) is used in most financial and traffic reports of system-wide airline performance.

 

 

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