ABSTRACT
Forecasting is the most critical area of airline management. An airline forecasts demand in order to plan the supply of services required to meet that demand. Forecasting involves different types of forecasts, each of which pose different methodological problems. The forecasting methods more widely used by airlines, often in combination, fall broadly into three groups of growing complexity: qualitative methods, time-series projections and causal or econometric methods. Of the numerous forecasting techniques available to airlines, executive judgement is one of the most widely used, often to modify and adapt other more mathematical forecasts. In many circumstances such an empirical approach to forecasting may be more appropriate than the more econometric methods. Air freight forecasting models have generally been less successful than models for forecasting passenger demand. The dramatic impact of the entry of a low-cost carrier on London–Nice traffic highlights one of the problems of forecasting based on time-series data.
