The gray portion of your load factor is additional transfer passengers (alliance or hub). If you weren't in an alliance or the flight wasn't to/from a hub, then you wouldn't have those passengers.
Transfer passengers bring less profit than direct passengers (as is the case usually in real life too).
Also, filled seats (with less profit) are better than empty seats. You can't really fix it, either you're charging too high in ticket price, or your daily seats is greater than your daily demand.
Thanks for your response! Really appreciate it