Airline Metrics: Passenger Load Factor

Ashwin Jadhav, a member of our AirlineGeeks team, will be authoring a weekly series highlighting some of the important metrics that airlines monitor on a daily, weekly, monthly, quarterly and yearly basis to improve performance. From a passenger’s perspective, this series will provide an excellent insight on how these metrics affect the way you travel.


Previous Metric in the Series: Revenue Passenger Kilometers

Definition

Load Factor (LF), also known as passenger load factor (PLF), is an airline industry metric that measures how much of an airline’s passenger carrying capacity is used. Not to be confused with aeronautic load factor, PLF only measures capacity utilization.

*Aeronautic load factor, also often called load factor, is defined as the ratio of the lift of an aircraft to its weight. It’s purely a measure of external stress applied onto the structure of the aircraft.

How is it calculated?

PLF is calculated by dividing Revenue Passenger Kilometers (RPK) by the Available Seat Kilometers (ASK). Hence, assuming the capacity of an airline remains the same, an increase in RPK is directly proportional to an increase in PLF. Its formula is:

Revenue Passenger Kilometers / Available Seat Kilometers

The ratio is usually multiplied by 100 to obtain a percentage value. This makes it easier to compare PLF in a harmonized manner from airline to airline. PLF number should be calculated per plane, but is usually quoted per airline.

**While miles are the preferred unit of measuring distance in the U.S., the rest of the world uses kilometers as units for measuring distance. In the aviation industry, kilometers are used more often than miles in formulation and analyses of metrics and key performance indicators.

Why is it important?

PLF is one of the most critical metrics from a capacity management perspective. Airlines not only try to maximize their PLF, but also take decisions about pricing, capacity and frequency of flights based on this key performance indicator.

PLF trends give airline senior management a clear indication of whether their passengers to capacity ratio is improving or declining. This is an important efficiency measure, but it does not consider the pricing and the profitability at which the capacity is sold. It also implicitly assumes that the airline’s fleet is fully utilized in terms of the number of kilometers flown.

Simple Example

Blank Airlines operates one Boeing 767-300ER aircraft with a capacity of 285 passengers between New York JFK and Chicago ORD. The revenue passengers for the route are 203 passengers per leg. The distance between the two airports is 1,200 KM, which means that the load factor will be calculated as follows:

4.1

Based on the frequency of this route per day and per year, the daily and annual PLF can be calculated accordingly.

Real-World Quiz

Blank Airlines is a domestic U.S. carrier that operates a fleet of 10 aircraft between major cities in the country. The type of aircraft, number of passengers, aircraft capacity, city-pairs, and distances are given below. Assuming that the aircraft operates for all 365 days in a year and assuming that all passengers are revenue passengers, what will be the PLF per year for Blank Airlines?

Aircraft Number of Passengers Capacity City-Pair Frequency            (+ Return Legs) Distance (KM)
Boeing 737-800 190 202 JFK-ORD Daily (4x) + (4x) 1,188
Boeing 737-800 200 210 JFK-MIA Daily (4x) + (4x) 1,757
Boeing 737-800 210 240 JFK-ATL Daily (4x) + (4x) 1,223
CRJ700 60 68 JFK-IAD Daily (6x) + (6x) 365
CRJ700 62 68 JFK-PHL Daily (6x) + (6x) 151
CRJ700 63 68 JFK-YUL Daily (6x) + (6x) 535
CRJ700 68 68 JFK-CLT Daily (6x) + (6x) 871
CRJ700 66 68 JFK-BOS Daily (6x) + (6x) 300
A330-300 380 390 JFK-LAX Daily (2x) + (2x) 3,975
A330-300 410 410 JFK-SFO Daily (2x) + (2x) 4,154
Ashwin Jadhav
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Ashwin Jadhav

Ashwin is an aerospace engineer by profession and probably the only person that picked commercial aviation over being a rocket scientist. His expertise include Airline Strategy, Flight Operations, and Air Traffic Management.

Ashwin currently works in the aviation industry in the Flight Operations domain. He has not only gained a lot of experience from various airlines globally, but has also saved them a few dollars through trajectory optimization, tweaking their network, fleet and schedule strategies, implementation of best practices, etc.

He speaks English, Russian, French and 3 Indian languages. In his free time, he is a Canadian national level soccer coach and a delirious poker player. His dream is to one day own and operate his own airline.
Ashwin Jadhav
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