We sat down with Aidan Mooney, vice president at air service development consultancy ASM, sister company to Routes, to discuss their Passenger Route Forecasting tool, Forecast 1.
What is Passenger Route Forecasting?
To forecast is to 'predict or estimate' a future event or trend and so by the very nature of the activity, a passenger route traffic forecasting between two airports is an estimate of what might be achieved if the service is operated in the future.
There are many techniques and approaches to forecasting passenger traffic data, some of which will be familiar terms such as ‘time series’, ‘econometric’ and ‘judgmental’ forecasting. To build a robust passenger route forecast a number of these forecasting methodologies along with various assumptions and insight need to be applied to the data to build up different scenarios and ultimately deliver the outputs for the chosen route.
Different approaches and different methodologies can produce different outputs and so the key to developing robust and defendable passenger traffic forecasts is to understand your airport's local market, how it has reacted previously to changes in air services, what traffic is being lost to other airports in your region and then being able to model and replicate the changes to your theoretical opportunity to demonstrate what should happen. Running the analysis at different times of the day or with different aircraft types and frequencies can have an impact on the outputs so understanding the impacts of these changes is important when presenting the outputs.
Why do airports need forecasting?
Having access to detailed passenger route forecasts firstly enables the airport operator to better understand the viability of specific target markets and routes that might form part of the airports strategy and business plan. Understanding the viability of these targets enables them to be prioritised and also enables a clearer understanding of what is required to deliver specific routes in the future. Chasing new air services that are aspirational or desirable but that in reality are just not viable is not a good use of anyone’s time so being clear on the targets that are achievable and deliverable will help deliver the business objectives more efficiently and effectively.
Having identified these more viable opportunities and the target carriers to deliver these opportunities, be it new air service to a new market, a competitor on an existing market or additional frequency and/or capacity from an incumbent carrier, the passenger route forecast will show what the targeted additional capacity would be expected to achieve when introduced to the competitive market and help to facilitate far more in-depth conversations with the target airlines to demonstrate the make-up of the traffic mix, the value of it in that market.
What are airlines looking for?
Most airlines spend a limited amount of time evaluating new routes and markets. They rely on the airports and tourist boards to assist in helping their evaluations through market updates and analysis. This is where a passenger traffic forecast can differentiate your airport from your competition and help to create that attention grabbing presentation to show the market potential under different scenarios and conditions.
Airlines want to know what the mix of traffic on a proposed services will be, what share is “local” traffic travelling between the two markets and what is “connecting” traffic at each end of the service connecting either “beyond” the destination, “behind” the origin or “bridge” traffic that connects at both ends of the route, so traffic that originates “behind” the origin and connects “beyond” the destination.
Airlines also want to know what the optimum time of day to operate services is to capture the greatest share of this traffic whilst minimising ground time. They are interested in the anticipated average air fares and RASK to allow them to prioritise their own detailed analysis and evaluation when considering network changes and developments.
What is Forecast 1?
ASM’s Forecast 1 is an affordable Passenger Route Forecasting tool that allows the user to test scenarios for a target route market and report these outputs that the airlines are looking for.
Delivered to you with the local and target markets passenger data and schedules, Forecast 1 allows for a number of variables to be tested to assess the impact on the passenger route forecast. These include the level of penetration of the local markets from competitor airports and the anticipated level of stimulation. The flight timings and connection windows can also be changed to see the impact on the forecast depending on the time of day of operation.
Selecting similar markets from both the origin and destination airports allows Forecast 1 to benchmark how existing routes capture share in their markets which is used to replicate the level of penetration the proposed new market being evaluated might achieve, allowing different scenarios to be run with different types of carriers such as Low Cost or Full Service operations.
How will it help me achieve my route development goals?
This level of information and detail will enable airports and tourist boards to really focus on the best opportunities for their airports and to deploy the right time and effort in pursuit of your route development goals. Armed with the information detailed at a route by route level, Forecast 1 will enable far more informed and insightful discussions with your target airline partners, talking to them in their language on how a proposed air service might develop in a given set of parameters.
By identifying and demonstrating the opportunities, airlines will be far more engaged in progressing their own evaluations and getting your route development targets higher up their priority list for evaluation. With an increasing number of airports pitching to airlines for the scarce resource of new airline capacity, being prepared with a strong and robust passenger route forecast will make your airline engagement meetings more focussed, more meaningful and more productive which in turn will make them more successful.
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