Monday, August 03, 2009

Airlines in July: Look At Those Load Factors!

Continental Airlines, usually the first to report its monthly operational results, says it had a load factor of 87.8 percent in July -- 3.1 points higher than the already high load factor in July of 2008.

The load factor is the percentage of available seats filled by paying customers. A load factor above 80 percent means that on most flights, all of the seats are always full.

The current whopping load factors, which will likely be similar on other major airlines, don't mean there's an increase in passenger demand. Au contraire. The number of people flying Continental decreased by 3.4 percent in July - but the number of seats available decreased by 6.3 percent.

Meanwhile, passenger revenue -- the money the airline collects from its customers -- was off by 16.5 to 17.5 percent, Continental estimates.

Do the math and you will achieve a good understanding of what lies ahead. A shrinking system, with planes packed full. And higher fares to jack up those abysmal revenue numbers.


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