Skip to content

Airline Seating

Have you ever realized that when you get on a plane and look around, there are little to zero empty seats? Or, have you ever heard an airline try to sell credit to passengers because they overbooked their flight? According to the Bureau of Transportation Statistics (BTS), the odds of seeing an empty seat next to you on your next flight are even slimmer than they were before. The load factor, which is the ratio of the average amount of some quantity and the maximum possible, has been increasing significantly since January of 2000. An empty flight would have a load factor of 0 and a full flight would have a load factor of 100.

The graph above illustrates the load factor of US domestic flights between the years of 2000 and 2017. The red line represents before seasonal adjustment and the blue line represents after seasonal adjustment. Each peak on the red line can be represented by a summer month when travel is most popular, and each low-point on the red line is represented by a winter month when travel is least popular. You can tell that the gap between these points has become smaller over time suggesting that airline's are becoming more efficient in improving their airplane capacity. If you look at the blue line, airlines are adjusting their business model seasonally,  mostly in winter months, to entice consumers to want to fly. As the load factor increases from 70 percent to roughly 85 percent, flights become more crowded. As flights become more crowded, the price per ticket goes down because the airline is making more money by selling more tickets. The Graph below shows how air fare increased steadily from 1989 to 2013 ( without considering the 2008 financial crisis). However, since 2013 air fare has decreased steadily. If you consider the above graph, this makes perfect sense because as load factor increases, price per ticket decreases. Obviously these graphs only have to do with US domestic flights, but is there anyway that load factor increasing could have any kind of effect on international flights? What do you think happens when airlines reach an average of 100 percent load factor? Will air fare lock at a certain price, or will it begin to increase?

 

 

 

 

 

 

https://fred.stlouisfed.org/graph/?g=fqyn

https://fred.stlouisfed.org/graph/?g=fqyl 

Crowds in the air

Written by Chris Randall and Danny Mitchell

 

17 thoughts on “Airline Seating

  1. Ellie Bradach

    I think that the load factor has an affect on both domestic and international flights because no matter the destination, airlines want to sell more tickets. I don't think that airline will ever reach a 100 load factor because that means that every flight is completely booked every time and that is just not possible. Although the load factor probably does have some effect on the overall price of tickets, I believe that the decrease in ticket prices is mostly due to innovations in technology, increases in efficiency and productivity within the airlines and airports, and a growth in number of travelers. Because of these reasons, I believe that airfare will continue to decrease in cost.

    Reply
  2. mcconnellm20

    The load factor should have an effect on international flights because airlines want to sell those tickets just as much as they want to sell domestic tickets. For example, American is going to aim to sell all of its seats for a flight to London, and American is also going to aim to sell all of its seats for a flight to Los Angeles. Therefore, American is going to try to increase its load factor on both domestic and international flights. If an airline company reached an average load factor of 100, that would mean that every single flight is full; all seats are taken. This is unrealistic. Airline companies like Delta and American have so many flights every day at various times and to many different places. It would be hard to have every single flight consistently full. Nevertheless, if an airline company did have an average load factor of 100, I think that air fare would increase in price. Since all seats on the airplane are consistently full, airlines can increase the price since there is a fixed number of seats and there are many people competing for them. There will be people that will be willing to pay more for than airline seat since it is harder to get an airline seat due to limited availability.

    Reply
    1. denatalec20

      I disagree. If an airline has a load factor of 100, some of those seats are being purchased last minute, as a result of original buyers not showing up for their flight. Because airlines just want bodies in those seats, to generate the largest profit margin possible, they will act as price takers when selling left over seats. Therefore, prices will be lower, since demand is not changing, but airlines are trying to make more seats available for sale.

      Reply
  3. murrayc20

    The same effects would occur for international flights as they would for domestic flights because airlines still need to get their seats filled, regardless of the destination. I believe there is more of a chance laod factor reached 100 percent for domestic price, mostly because domestic tickets are cheaper so more people would be willing to buy, even if the price slightly increases. This therefore makes for the possiblity for 100 percent of seats being filled. International flights are usually more expensive so people wanting to travel are already spending more than they would if they were to travel to a domestic place. So, people are already paying thier max for travel expenses and if international ticket prices increase slightly, a consumers willingness to pay would decrease. Therefore, there would be less of a chance for 100 percent load factor for international flights.
    In addition, it is hard to believe ticket prices would continue to increase. With improvements in technology tickets would be cheaper. With more people having a desire to travel, load percentage would increase and tickets would be cheaper.

    Reply
  4. richardsonw20

    Increasing load factor will affect international flights with increases in price just as it does with domestic flights. Rates for international flights are already expensive so increasing these prices will just make airlines want to sell these tickets more. I do not see a time in the future where airlines reach an average of 100 percent load factor. Air lines will advocate for larger planes to be built or they will find a way to offer more flights at more times so that single flights are not all full. I think air fare will not lock at a certain price. It will continue to rise as people continue to pay for it.

    Reply
  5. Kaitlyn Fitzsimmons

    I think as long as competition from airlines doesn’t increase and fuel prices remain stable, a 100% load factor would mean pretty steady prices since there wouldn’t be a driver for a change in price. It’s important to consider that a higher load factor means more efficient travel. Concentrated passengers means better rates of carbon emissions. It’s a difficult question whether airlines should cancel flights with very small load factors. On one hand this way of travel is less efficient, but really inconveniences travelers and hurts airline reputations. I think international flights would be similarly affected by the load factor, but flights within Europe are already significantly lower than many domestic flights within the U.S. Therefore these prices may be less affected since there is little room for price cuts.

    Reply
    1. laniere20

      I agree that if fuel prices remain stable then the prices will be stable, but how long do you think fuel prices will remain stable. Due to their volatility, it seems possibly that fuel prices could increase. If fuel prices were to increase, would this deter customers to fly because of the increase in ticket prices or do you think airlines would reduce the number of flights offered in order to reduce their fuel expense?

      Reply
  6. mizeo20

    As we enter December, I am seeing more targeted advertising for flights during the non-traditional travel months. As this load factor goes up, the price of airline tickets goes down as you described. This is due to a customers willingness to pay. An airliner can completely fill up a planes seats if they offer cheaper prices for a full plane, whereas if they charged a higher price, some businessmen/women would still willingly pay a higher price. I think that a load factor of a hundred percent isnt very realistic for these domestic fliers. Though if airlines did reach a 100 load factor and if airlines are full 100% of the time, prices of airline tickets would rise because of increased competition.

    Reply
  7. laniere20

    Though it seems as though 100 load factors would be impossible to achieve, with the amount of people who fly on standby and people with special access such as pilots and their families, flight fill up. Even during off seasons, airlines understand that they do not need to have as many flights running and therefore people must pick between only a few flights, which will fill up as well. I feel as though it is very unlikely that airfare prices will lock. The graph above shows that in the past airline ticket prices have been decreasing gradually, with an exception in starting in 2014, and i think that airline prices will continue this pattern and continue to increase. It is impossible for airline ticked prices to remain steady, especially because they change price as the date of the flight gets closer.

    Reply
  8. Khang Truong

    It might not be enough to look solely at load factors. How much an airline makes is not solely a function of the seats it fills but more specifically the amount of first class seats it fills. A coach class flight to Tokyo on AA might run you about two grand, while you could expect to fork over ten to twenty thousand dollars for a first class ticket of the same itinerary. It's little surprise then to find that airlines make more from the handful of first class passengers than the 100+ economy class passengers. It doesn't seem unreasonable to say that airlines will capitalize on this and make more luxury accommodations to its business and first class passengers.

    Reply
  9. gianakosa20

    I don't think airline prices will ever lock, regardless of load factors, as airlines know consumers will pay varying prices depending on the season and on the urgency of a flight. When the load factor for a flight is higher, flights might be cheaper because there is increased competition. I think it's interesting. The second graph shows that prices for flights have started to decrease since 2013, which can be attributed to load factors increasing.

    I also think it is important to note that, as time progresses, research and development (R&D) in airfare also progresses. Airline and airport technology is constantly advancing, introducing more efficient planes that require less money to support. With better technology, airfare should decrease.

    Better technology, coupled with increasing load factors, should continue to bring the cost of flying down. This being said, I do not think that airfare will ever lock, due to reasons listed above, and also due to the amount of competing domestic airlines.

    Reply
  10. shenr20

    The price of air tickets are determined by two main factors. The first one is the government regulation.The government will set benchmark prices and fluctuate ranges according to the cost of air transportation, market supply and demand and competition. But on the other hand, the airlines companies introduced a system of multistage ticket price, according to the season, the ticket time, number, and specific consumer groups, flight time, aircraft and other factors, within the scope of the benchmark prices and floating ranges based on the specific situation of supply and demand, and independently work out the price.

    Airline ticket is actually priced at the highest price that a user is willing to pay when considering the supply and demand relationship. For example, with the price of the same ticket fluctuating over time, the ticket price may suddenly drop.

    Another example is the transfer. On the same flight, connecting flights tend to be cheaper than direct flights. The cost of a transfer flight is obviously more expensive than direct flight (The shortest line segment is between two points), but users who are willing to transfer often pay less. Airline seats are perishable goods, and once the flight leaves, unsold seats can't be sold anymore. After the flight schedule has been set and annonced, most of the operating costs have been confirmed. And the increase of carrier rate hardly increases the operating costs. As long as the marginal revenue of carrying one more passenger's is greater than the marginal cost, the marginal profit will contribute to the fixed costs. That's why the connecting flight is cheaper than the direct flight. The price of a plane ticket is virtually impossible to break down because it is determined by both the supply and demand.

    Reply
  11. moodyj20

    I think a load factor of 100 would mean that the flight is at 100% capacity and every seat is full. This could have two different effects. One option is that the flight is full but more people want to be on it and are competing for the same seat, meaning demand increases and prices go up so they make more money. The other scenario is that the airline achieved full capacity by overbooking their flight and now they will have to offer a passenger who didn't get a seat a payment for their troubles. This would mean that they're losing money.

    Reply
  12. andersons20

    Fortunately, the load factor is highly unlikely to ever reach 100%. Even though there has been a significant rise, many factors derail from the probability of airlines' goal to reach it. For example, ticket sales for a concert, baseball game, etc. There will always be miscellaneous factors present that will cause a varied number of consumers to be absent such as illness and emergencies. Not to mention if airlines were reaching a load factor of 100% there would be issues of maximizing potential on pricing. This provides a dynamic pricing juxtaposition although due to price ceilings. Government regulation will only allow prices to reach a certain level, but whether this is beneficial or detrimental is still up for debate. Price ceilings may result in a misapplication of resources and an ultimately lower quality of flight experience. On the other hand, prices will not elevate. Choices will have to be made regardless, but government regulation will dictate the direction of the conversation.

    Reply
  13. Robert Griffin

    It would be extremely difficult to reach an average load factor of 100% for several reasons. First, there cannot be equally full demand for every single flight just based off of the nature of destinations and times. A flight leaving from Lincoln, Nebraska at noon on a Thursday to Des Moines, Iowa physically cannot always have a full cabin unless the airlines keep the number of flights down artificially low, which would lose them money. Assuming that a universal 100% load factor was possible, however, I imagine that the price would lock for a time, but then would slowly follow the trends of inflation, perhaps lagging behind a little bit with some sort of response time. Technological advances could also decrease the price per plane each airline must spend, which would also shake up the equation. On the whole, there are a great deal of factors that would lead to the price levels of airline tickets remaining ever-changing and they will never lock in place indefinitely.

    Reply
  14. compolir20

    I think consumers willingness to pay is the largest reason for lower air fares. Flights are simply not as convenient as they were before 9/11. TSA wait times at Newark Liberty International airport ranges form 30 to 60 minutes on average and that will jump during peak travel times. Airplanes also travel, on average, at a slower pace to be more fuel efficient. Airlines are decreasing leg room and limiting the number of flights because people are still willing to fly less than they were before 2001.

    Reply
  15. smithg20

    While some might thinking having a load factor of 100% would lower consumer prices, I believe having such an inflated load factor would actually increase the price of tickets. If airline companies can consistently expect their flights to meet capacity, they would face very little incentive to drop prices at certain times and would be faced with such strong demand for their products that consumers would be willing to pay even higher prices. A load factor of 100% would also most likely be accompanied by other trends. For example, in order for an airline company to reach this benchmark for all flights they would probably have to reduce their array of flight options in order to be sure to fill every flight to capacity. Reaching such a high load factor would also need to be accompanied by an improvement in technology that would allow the airline companies to efficiently execute this goal, while maintaining a loyal consumer base.

    Reply

Leave a Reply