Aviation
Load factor
The share of seats filled with paying passengers: RPK divided by ASK.
Last reviewedWhat does Load factor mean?
Load factor is RPKs divided by ASKs, the share of capacity that was sold. Example: 153,000 RPKs on a flight with 180,000 ASKs gives a load factor of 85 percent. Most of the cost of a flight is the same whether seats are full or empty, so a few extra points of load factor can make a big difference to profit. A high load factor bought with very low fares can still lose money, so airlines read it together with yield and RASK. Cargo uses a similar measure based on tonne kilometres.
Where does it come up in case interview prep?
- Unit economics in any businessLesson in How industries work: the toolkit
- How airlines, airports, and lessors make moneyLesson in Airlines, airports, and aircraft leasing
- Airline unit economics: RASK, CASK, load factor, fuel, and leasingLesson in Airlines, airports, and aircraft leasing
- Aviation players, trends, and how to crack the casesLesson in Airlines, airports, and aircraft leasing
Related terms
- ASK (available seat kilometre)One seat flown one kilometre: the standard measure of airline capacity.
- RPK (revenue passenger kilometre)One paying passenger flown one kilometre: the standard measure of airline traffic.
- Break-even load factorThe load factor at which revenue exactly covers costs at current fares.
- Yield (airlines)Passenger revenue per revenue passenger kilometre: the average fare per kilometre.
- Occupancy rateThe share of available rooms (or beds) that are filled over a period.
- RASK (revenue per available seat kilometre)Total airline revenue divided by ASKs.
- CASK (cost per available seat kilometre)Total airline operating cost divided by ASKs.
- Fuel hedgingLocking in the price of part of future fuel to reduce the risk of price swings.