Hello guys,
I have a question I am flying a few routes with my new airline. On one route I have a LF(load factor) of 40.5% and I make $52,345 and in my other flight I have a LF of 90.2% and I only get 12,150????? How is this possible? Any ideas?
-Aerlingus1916
Ticket prices, is your answer : your more profitable route flies fewer pax, but they are paying far more per seat/mile for the journey : you will probably also have lower costs per seat/mile on that route : basically, shorter routes tend to make more profit.
That makes more sense :D
Thank you very much
- Aerlingus1916
LFs are just a statistical documentation.No other values are mathematically tied to it. Only difference between fare income and costs really tell you if flight is successful.You can well loose money with 100% LFs as well you can win with a half-full plane.100 % LFs may indicate your fares are too low.In your case, being a very young airline, you will have to wait how things evolve over time, when your RI and CI rise.
Thank you
- AeRlInGuS1916
I added a small bit after your answer : its the difference between per seat/mile revenue and costs that affect profitability : you can raise the first by increasing ticket prices : that will lower LF's a bit, but each pax will be paying more and you often find the flight is, overall, more profitable : but sometimes, lowering prices can increase LF's enough to make a flight more profitable : It all depends where the 'break-even' point is on that particular route and how much demand exists. High demand, then increase prices : low demand, then lower prices will attract more travellers : part of the skill/art/sorcery of the game is working out how much you need to charge on a route to maximise its profitability.
Always remember though : the route, or aircraft, profit figure is not the whole story : each aircraft/route has to also cover its share of the company overhead.
That makes a lot of sense !
thank you again ;D
the term 'load factors' can be confusing, and also how it gets used by many : of itself, as exchblg says, it affects nothing. Its just a way of expressing how many pax decided to fly on that route after all the things that do affect matters were calculated : price, frequency, competition, seat comfort, flight times, aircraft type, overall demand, CI, RI and some others, oh, and an element of randomising too.
But its a useful quick guide : if it is rising, then all (or most) of the variables are working in your favour : time to consider squeezing a few extra dollars out of the pax! But if it is suddenly falling, then its a warning that something has changed and not in your favour. An extra flight from the competition, perhaps, or they have slashed prices, or, worse case, an overall demand slump : so its time to re-act and discover what has happened, why and fix it.
But having a high LF can mean no more than having a low LF : neither can tell you if a route is actually as profitable as it should be, only the revenue/ cost numbers do that.