What Is An Airline’s Load Factor And Why Does It Matter?

Load factor might be a term you’ve heard while discussing the performance of an airline or specific routes. It essentially means what percentage of available seats an airline can sell on its flights. The load factor can be a critical figure for airlines, proving their success in the market.

Stansted Airport Sunrise
Load factors are a good metric to judge an airline’s success. Photo: Getty Images

Keeping it high

Every airline aims to maximize its load factor, i.e., sell more seats on all of its flights. By carrying more passengers, airlines grow their revenue and eventually reach a breakeven, beyond which they can turn a profit. Each airline’s breakeven load factor depends on their costs and expenditure, with the figure usually being around 70% on average.

An analysis from Forbes in March showed that the big US airlines, United, Delta, American, and Southwest, need a load factor between 72.5% (Southwest) and 78.9% (American) in order to not make a loss on their flights. This means when these carriers reach load factors of 90% and beyond, it signals a very profitable month or year.

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American 787-9
American Airlines needs over 79% of its planes to be full in order to turn on a profit. Photo: Jay Singh – Simple Flying

For budget airlines like Ryanair, the load factor is absolutely critical. Since the airline offers extremely cheap fares, it’s imperative to fill up the entire plane with passengers to sustain itself. In 2019, the carrier achieved an impressive 96% load factor, which meant only 4% (or 8 seats) were empty across every flight on average.

It should be noted that full-service airlines like Delta and American can get away with slightly lower load factors (but still well above the breakeven mark) thanks to lucrative corporate contracts and business travel.

easyJet and Ryanair
Low-cost carriers rely heavily on high load factors to sustain their low fares. Photo: Getty Images

Route selection

Route planning is an important step for airlines, requiring months or years of research to see if it will be profitable. However, once service begins operating, airlines intently watch the load factor to see if the route is doing well. When deciding whether to cancel a route or increase frequencies and services, the load factor is the main indicator of success.

Boeing 787-10, Operators, United Airlines
United has software in place to cancel low-load factor flights. Photo: Getty Images

More recently, airlines have also begun using low load factors as a reason to cancel flights and reduce services. In 2020, United rolled out an automatic software to cancel low-load flights under 30% and find alternatives for passengers. As demand remains low, airlines recorded load factors in the single digits in April 2020 and have still only reached 30-40%, far below the breakeven point.

A sign of recovery

While revenue and load factor aren’t always the same, they are correlated to each other. As airlines recover after 2020, keeping an eye on the load factor signals how many passengers are willing to fly, and who they want to fly with.

It should be noted that airlines with high load factors could also be much smaller, which means the number should be taken with a grain of salt when comparing airlines.

China southern All you can fly passes
Load factors will be an important metric to look at airline recovery in the future. Photo: Getty Images