State-owned China Southern Airlines released its full-year and December 2020 performance results recently. Unsurprisingly, when compared to results of the previous year, the airline has seen a significant drop in almost every metric, including available seat kilometers (ASK), revenue passenger kilometers (RPK), and overall load factor. Somewhat notable, however, is the airline’s ability to attain a 60% overall load factor over the course of 2020. Excluding cargo and mail, the passenger load factor alone was over 71%! Let’s look at how the airline achieved this.
Before we get into reporting on load factor, let’s first see what it actually means. Investopedia defines load factor as,
“…an indicator that measures the percentage of available seating capacity that is filled with passengers.”
It goes on to say that the higher the load factor, the more an airline can spread its fixed costs amongst passengers. With the nature of the airline business typically characterized by thin profit margins, having a high load factor is essential to an airline’s success.
China Southern’s performance results
According to the airline, its cumulative 2020 overall load factor was 61.38% – this figure combines both passenger load factor as well as cargo and mail. This is down 8.88% from the previous year.
The passenger load factor alone, however, was an even more impressive-sounding 71.46%, down 11.35% from the previous year. Factoring in cargo and mail brings down the overall figure as it was just 49.79% – even if this segment does show a small 0.77% bump in year-over-year change.
Overall, domestic, regional, and international passenger load factors are down 10 to 32% compared to the previous year, with regional and international cargo and mail load factors up. Regional cargo and mail even saw a jump of 20%.
Analyzing the numbers
While achieving more than 61% for an overall load factor (and over 71% for passengers) might sound impressive, those familiar with statistics know that this can be deceiving.
While the airline’s planes were 71% full in terms of passengers, we have to think about how many planes are actually flying and how often – when compared to a ‘normal year.’ After all, the airline (or any airline) could operate one aircraft once per week, fill it with passengers, and claim a 100% load factor.
Thus, we need to examine the airline’s capacity figures to get a more accurate picture of its performance.
Capacity for passengers is measured in available seat kilometers while ATK, available tonne-kilometers, is a metric used for cargo and mail. Examining these figures gives us a very different idea of the airline’s performance.
That’s because, when compared to 2019, China Southern reduced its ASKs and ATKs in almost every category. The most shocking numbers are an 87% drop in regional ASKs and an 80% drop in international ASKs.
International cargo and mail shines
Domestic and regional cargo and mail took a hit too. However, international cargo and mail saw 1% additional capacity compared to the previous year. Combined with the load factor increase in this sector, it’s a fairly impressive achievement for the carrier. Indeed, anything that isn’t a substantial decline can be considered impressive for 2020.
What do you think of China Southern’s 2020 performance results? Were there any surprises for you? Let us know in the comments.
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January 17, 2021 at 01:31PM
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China Southern Notches Over 60% Load Factor In 2020 - Simple Flying
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