JS blocked

Need I say Moores

Are lower load factors part of the network carrier product?

An interesting discussion point emerged from the Farnborough Air Show, when Boeing VP-commercial marketing Randy Tinseth said lower load factors are a service expectation when passengers travel on legacy carriers.

Tinseth was speaking at the release of Boeing’s updated 20-year forecast. Two points struck me from that briefing and both related to improved airline productivity.

The first was an interesting fact. Tinseth said airlines are filling their aircraft more, flying farther and using them for more hours in a day. This is not news, but he said this better use of assets had removed demand for 4,000 aircraft since 2008. That statistic really put that airline productivity gain in context for me, in a way I’d not thought of before.

Average load factors have risen five points in 10 years, airlines are getting 13% better utilization from their aircraft and average stage length has increased by 12%.

During the Q&A, I asked Tinseth whether there’s scope for airlines to squeeze aircraft productivity even further. His basic answer was you can, but it’s getting tougher and tougher.

Tinseth said airlines are getting to the “practical limit” on average load factor at 81-82%, averaged across all business models (LCC load factors are higher).

“If network carriers have the same load factor as low-cost carriers, they wouldn’t be providing the service that passengers expect,” he said.

Explaining the rationale behind this thinking, Tinseth said network carrier passengers expect to be re-accommodated within a reasonable timeframe in the event of disruption. He said higher load factors change the business model.

These comments intrigued me. My feeling is this may be true for business-class seats, where higher prices lead to more seats being left empty, but economy has become so commoditized that both business models just want to fill as many seats as possible.

In Europe, seat pitches on LCCs and network airlines are often the same. The buy-on-board product is the same. The paid checked luggage is the same. To get more space on both models, you pay a premium.

Against this fiercely competitive backdrop, keeping load factors lower so passengers can be re-accommodated more quickly strikes me as a bygone luxury that network airlines simply can’t afford.

Victoria Moores victoria.moores@informa.com

Please or Register to post comments.

What's Need I say Moores?

Need I say Moores

Blog Archive

We use cookies to improve your website experience. To learn about our use of cookies and how you can manage your cookie settings, please see our Cookie Policy. By continuing to use the website, you consent to our use of cookies.