Forecast passenger numbers
Thread Starter
Forecast passenger numbers
My apologies in advance if this should be in the "Tsk he knows nothing" forum but I hope people will forgive me
In choosing where an airline should deploy aircraft, staff, marketing costs and all the other resources that go with a new route, most airlines will tend to do a fair bit of market research to ensure ample local demand for such a route.
I see websites that allow airports to advertise themselves to airlines and make claims as to how many people would likely want to fly a handful of targetted routes. In cases when an airline swallows the bait, commits resources and opens the route, I then compare these airport claims against the number of people who actually pay some money to fly as passengers. While an airline always has work to do in the marketing and it takes time to develop a route into a commercial profit, usually the claims by airports of expected passenger numbers are drastically more than the number of physical bums on seats.
Do airports regularly put out 2 sets of figures - public figures for the local population to drool over which airlines know are a complete fiction and a private set of figures that is credible to airlines, or is there something fundamentally wrong with the methodology used ?
How do we get a situation of such a large difference between airport claims of demand and actual demand ?
In choosing where an airline should deploy aircraft, staff, marketing costs and all the other resources that go with a new route, most airlines will tend to do a fair bit of market research to ensure ample local demand for such a route.
I see websites that allow airports to advertise themselves to airlines and make claims as to how many people would likely want to fly a handful of targetted routes. In cases when an airline swallows the bait, commits resources and opens the route, I then compare these airport claims against the number of people who actually pay some money to fly as passengers. While an airline always has work to do in the marketing and it takes time to develop a route into a commercial profit, usually the claims by airports of expected passenger numbers are drastically more than the number of physical bums on seats.
Do airports regularly put out 2 sets of figures - public figures for the local population to drool over which airlines know are a complete fiction and a private set of figures that is credible to airlines, or is there something fundamentally wrong with the methodology used ?
How do we get a situation of such a large difference between airport claims of demand and actual demand ?
Join Date: Jul 2012
Location: dublin
Age: 64
Posts: 394
Likes: 0
Received 0 Likes
on
0 Posts
New rotes
FR asked estate agents where people bought 2nd homes in Europe then flew to nearest airport , ignoring past demand and created new demand where none existed
Sometimes the figures used by airports to attract the interest of new airlines are historical from a time when the particular route operated or, at that stage, may be just well educated guesses. No airline is likely to "swallow the bait, commit resorces and open the route" on the basis of those figures.
The airport will probably be expected to commission an independent feasibility study in order to convince the interested operator that their claims have some substance. The airline may well then employ its own consultant to analyse the figures and give an opinion as to their validity. These days airlines tend to expect the airport to spend the money on market research, as well as offering a substantial incentives and marketing package before seriously considering opening the route.
There are always exceptions of course and I believe OLT Express was one such which opened its shortlived routes to SEN without any of the above with predictable results.
The airport will probably be expected to commission an independent feasibility study in order to convince the interested operator that their claims have some substance. The airline may well then employ its own consultant to analyse the figures and give an opinion as to their validity. These days airlines tend to expect the airport to spend the money on market research, as well as offering a substantial incentives and marketing package before seriously considering opening the route.
There are always exceptions of course and I believe OLT Express was one such which opened its shortlived routes to SEN without any of the above with predictable results.
Join Date: Feb 2001
Location: In transit
Age: 70
Posts: 3,052
Likes: 0
Received 0 Likes
on
0 Posts
It's notoriously hard to forecast demand but one 'weapon' that is very useful is MIDT figures, released by IATA and the GDSs based on loads on a given city pair over a given period. So for example if you were thinking of operating a service from DUR - MAN, given that there is no direct flight, you would be able to get figures for O & D (origin and destination traffic) between origin DUR and destination MAN showing pax who had connected via the different possible connect points, so you would see that for example the demand for a direct flight was 150 passenger a week (not viable!) or 3000 (viable subject to certain criteria).
IATA - Passenger & Freight Forecast
IATA - Passenger & Freight Forecast
Join Date: Jan 2011
Location: France
Posts: 191
Likes: 0
Received 0 Likes
on
0 Posts
A subject close to my heart! 
No, there's just one set of figures - the fictional one; and yes there is something fundamentally wrong which is a belief that the real passengers will do what the MIDT/O&D predictions tell them. I have debated this point (quietly, but repeatedly) with different airport management teams over the last few years and in each case the reality has been exactly what you describe.
Ryanair's approach is the "correct" one: look at evolving human behaviour patterns and cater to a market that doesn't yet exist. A certain Steve Jobs did exactly the same with his company to great effect. If air transport is to be peddled as a consumer product, then airlines and airports have to stop treating it as a simple mode of (business) transport and use a more appropriate commercial strategy.
Do airports regularly put out 2 sets of figures - public figures for the local population to drool over which airlines know are a complete fiction and a private set of figures that is credible to airlines, or is there something fundamentally wrong with the methodology used ?
Ryanair's approach is the "correct" one: look at evolving human behaviour patterns and cater to a market that doesn't yet exist. A certain Steve Jobs did exactly the same with his company to great effect. If air transport is to be peddled as a consumer product, then airlines and airports have to stop treating it as a simple mode of (business) transport and use a more appropriate commercial strategy.
Last edited by CelticRambler; 17th Oct 2013 at 10:05.
In the case of hub airlines they are also looking at passengers who will connect at their hub. For example if Emirates serves a new UK city they will be looking at pax from the area to the Middle East, Indian Sub-Continent, Far East & Australasia (I heard a figure of 75% of pax transferring at DXB). Its interesting that United (before merged with CO) dropped their JFK - LHR service which may have been due a lack of connecting pax at either end and didn't succeed with JFK - HKG which you would have thought was a cert. (There may have been other factors as well.) You can get data from various sources such as CAA Passenger surveys, destination tourism surveys and so on, very few of them free.
Another issue you need to consider is yield. Many a route has achieved high load factor but made a loss. Others like the CX JFK to HKG route achieve a load factor in the 60s but seem to make money. Airlines will look at linking financial centres, places with high expat populations, etc. I've often wondered if it would have been worthwhile operating a Privatair style service between Aberdeen and Houston at the height of the North Sea Oil boom although a fuelling stop may have been necessary westbound, obviously the airlines didn't share my view.
I' afraid that its a long time since I did my M.Sc. when I was taught all this. I've since forgotten a lot!
Another issue you need to consider is yield. Many a route has achieved high load factor but made a loss. Others like the CX JFK to HKG route achieve a load factor in the 60s but seem to make money. Airlines will look at linking financial centres, places with high expat populations, etc. I've often wondered if it would have been worthwhile operating a Privatair style service between Aberdeen and Houston at the height of the North Sea Oil boom although a fuelling stop may have been necessary westbound, obviously the airlines didn't share my view.
I' afraid that its a long time since I did my M.Sc. when I was taught all this. I've since forgotten a lot!
Last edited by Peter47; 21st Oct 2013 at 17:29. Reason: See post below
Join Date: Feb 2001
Location: In transit
Age: 70
Posts: 3,052
Likes: 0
Received 0 Likes
on
0 Posts
Many a route has achieved high yield but made a loss
There's a fundamental misunderstanding amongst the public that full flight = profitable flight. Whereas that might be true if there is an approppriate mix of high/low yield traffic, it's often overlooked that you can fill a flight with 'bucket and spade' or VFR traffic but still make a loss. On the other hand the flight that operates outbound with a load of low yield passengers might operate inbound on a profitable basis.
