Airline yield

For an airline, revenue per passenger kilometre flown, as opposed to per seat available.

A carrier earning ₹4.05 per available seat kilometre at 86% load factor is earning about ₹4.71 per revenue passenger kilometre.

Yield and load factor are the two things an airline trades against each other. Filling the last seats requires discounting, which raises load factor and lowers yield, and whether that trade is worth making depends on whether the fare exceeds the marginal cost of carrying the passenger.

Yield is set by competition and by capacity. Capacity decisions are made a year ahead.

Fill the seat or hold the fare. Rarely both.

The trade-off is decided by marginal cost, which for a departing flight is close to nothing: the aircraft, the crew and the fuel to carry an empty seat are already committed, so any fare above the incremental cost of one more passenger improves the result of that flight. That arithmetic is why last-minute pricing behaves the way it does, and it is also the trap. A carrier that applies flight-level marginal thinking to its whole schedule ends up with a network priced below its full cost, which is the standard route to an industry that flies more people every year and never earns its cost of capital.