Posted in Operations and Supply Chain Terms, Total Reads: 306
Definition: Load Factor
Load factor is a measure of capacity utilization of public transport. The value of load factor assists in mathematical analysis and aids in calculating how efficient is the capacity utilization of services like airlines, railways and roadway services.
In other words, we can say that the load factor refers to total percentage of seats filled to the total number of seats available. Let’s explain through an example, let us say that an airplane has 500 seats. So, if a plane carries 400 passengers on average, its load factor is 80%.
1. Increase in efficiency
2. Reduction in costs
3. Helps airline to gauge profitability
As public transport has fixed costs to recover, having a higher value of load factor is always desirable. It ensures that the occupancy is maximized and there is minimum wastage of resources.