ABSTRACT
Forecasting is predicting, projecting, or estimating some future volume or financial situation—matters mostly outside of management's control. The choice of forecasting methods should be based on several factors, including availability of data, accuracy of available data, management sophistication, intended forecast use, and availability of electronic data processing. Forecasting by time-series or trend extension actually consists of interpreting the historical sequence and applying the interpretation to the immediate future. Forecasting passenger enplanements for a one-year period on well-established routes, for example, possess a fundamentally different forecasting problem than estimating enplanements on a new route, and forecasting methods must be chosen accordingly. Causal forecasts are based on a statistical relationship between the forecasted variable and one or more explanatory variables. Short-term forecasts are generally more accurate than long-term forecasts because the underlying determinants and the relationships between variables tend to change less in the short run than in the long run.
