When airlines think about their profitability and what routes to keep, they consider load factors but really it is the yield from the flight that matters,
No it isn't. It is the REVENUE from the flight that matters.
Yield is an average value - for example the average price per seat sold (but lots of seats may remain unsold!). Revenue is actually how much money you get. Yield Management and Revenue Management are two separate approaches to accounting. Revenue Management is the important one - unfortunately some airlines get bogged down concentrating on high load factors, or high yields whereas overall revenue is the important bottom line.
300 seats: full fare at $1,900; discounted at $1,300; would you prefer:
a) 50 full fare and 250 discounted, or
b) 190 full fare and 50 discounted, or
c) 135 full fare and 135 discounted?
The one that makes you most money (c) is not necessarily the one that gives you the highest average yield (b) or the highest load factor (a).
Revenue
Yield Load-factor a) (50*1900)+(250*1300)=$420,000
420000/(50+250)=$1,400 ((50+250)/300)*100=100% b) (190*1900)+(50*1300)=$426,000
426000/(190+50)=$1,775 ((190+50)/300)*100=80% c) (135*1900)+(135*1300)=$432,000
432000/(135+135)=$1,600 ((135+135)/300*100=90%
a) gives highest load factor
b) gives highest yield
c) gives highest revenue.
It's balancing ticket prices and volumes that require good revenue management - not good yield management.