Forecasting & methods

CE G545 Airport Planning And Design

For Internal Circulation Only

References
1. Text Book: Horonjeff
Intro
An understanding of future demand patterns allows the planner:
• to assess future airport performance in light of existing and improved facilities,
• to evaluate the impact of various quality of service options on the airlines, travelers,
shippers, and community,
• to recommend development programs consistent with the overall objectives and policies of
the airport operator,
• to estimate the costs associated with these facility plans, and
• to project the sources and level of revenues to support the capital improvement program.

• It is essential in the planning and design of an airport to have realistic estimates of the future
demand to which airports are likely to be subjected. This is a basic requirement in
developing either an airport master plan or an airport system plan.
• These estimates determine the future needs for which the physical facilities are designed
• Facility planning is necessary to provide adequate levels of service to airport users
• The development of accurate forecasts requires a considerable expense of time and other
resources because of the complex methodologies which must be used and the extensive
data acquisition that is often required.
Intro
• By having a demand forecast, the expected level of uncertainty associated with the
estimation of essential variables will be reduced, thereby reducing the probability of errors
in the planning process and enhancing the decision-making process.
• The benefits gained due to a better knowledge of the magnitude and fluctuation in demand
variables will outweigh the costs incurred in performing the forecast.

The principal items for which estimates are usually needed include:
• The volume and peaking characteristics of passengers, aircraft, vehicles, and cargo
• The number and types of aircraft needed to serve the above traffic
• The number of based general aviation aircraft and the number of movements generated
• The performance and operating characteristics of ground access systems
Using forecasting techniques, estimates of these parameters and a determination of the peak
period volumes of passengers and aircraft movements can be made.
From these estimates concepts for the layout and sizing of terminal buildings, runways,
taxiways, apron areas, and ground access facilities may be examined.

• It is very important to remember that forecasting is not a precise science and that
considerable subjective judgment must be applied to any analysis no matter how
sophisticated the mathematical techniques involved.
• By anticipating and planning for variations in predicted demand, the airport designer can
correct projected service deficiencies before serious deficiencies in the system occur
Levels of Forecasting
• Demand estimates are prepared for a variety of reasons.
• Broad large-scale aggregated forecasts are made by aircraft and equipment manufacturers,
aviation trade organizations, governmental agencies, and others to determine:
• estimates of the market requirements for aviation equipment, trends in travel, personnel
needs, air traffic control requirements, and other factors.
• Similarly, forecasts are made on a smaller scale to examine these needs in particular regions
of an area and at specific airports.

• The type of forecast and the level of effort depend on the purpose for which the forecast is
being used.
• Forecasts are typically prepared for short-, medium-, and long-term periods.
• Short-term forecasts, up to 5 years, are used to justify near-term development and support
• operational planning and incremental improvements or expansion of facilities.
• Medium-term forecasts, a 6- to 10-year time frame, and long-term forecasts of 10 to 20
years are used to plan major capital improvements, such as land acquisition, new runways
and taxiways, extensions of a runway, a new terminal, and ground access infrastructure.
• Forecasts beyond 20 years are used to assess the need for additional airports or other
regional aviation facilities
Levels of Forecasting
• Forecasting is done on two levels,
– aggregate forecasting
– disaggregate forecasting

• Aggregate forecasts are forecasts of the total aviation activity in a large region such as a
country, state, or metropolitan area.
• The entire system of airports is examined relative to the geographic, economic, industrial,
and growth characteristics of a region to determine the location and nature of airport needs
in a region.
• Typical aggregate forecasts are made for such variables as the total revenue passenger-
miles, total enplaned passengers, and the number of aircraft operations, aircraft in the fleet,
and licensed pilots in the country.
• Disaggregate forecasts deal with the activity at individual airports or on individual routes.
• The disaggregate forecast then examines the expected demand at local airports and
identifies the necessary
• development of the airside, landside, and terminal facilities to provide adequate levels of
service
• Disaggregate forecasts for airport planning determine such variables as the number of
originations, passenger origin-destination traffic, the number of enplaned passengers, and
the number of aircraft operations by air carrier and general aviation aircraft at an airport.
Forecasting Methods
• There are several forecasting methods or techniques available to airport planners ranging
from subjective judgment to sophisticated mathematical modeling.
• The selection of the particular methodology is a function of
– the use of the forecast,
– the availability of a database,
– the complexity and sophistication of the techniques,
– the resources available,
– the time frame in which the forecast is required and is to be used, and
– the degree of precision desirable

There are four major methods:

• Time series method
• Market share method
• Econometric modeling
• Simulation modeling
Forecasting Methods
• Time series analysis essentially involves extrapolating or projecting existing historical activity
data into the future.
• Market share forecasting is a simple top-down approach, where current activity at an
• airport is calculated as a share of some other more aggregate measure for which a forecast
has been made (typically a regional, state, or national forecast of aviation activity)
• Econometric modeling is a multistep process in which a casual relationship is established
between a dependent variable (the item to be forecast) and a set of independent variables
that influence the demand for air travel.
• Once the relationship is established, forecasts of independent variables are input to
determine a forecast of the dependent variable.
• These techniques can also be referred to as a bottom-up forecast.
• Simulation models are often used when one needs very detailed estimates of aircraft,
passengers, or vehicles. These models impose precise rules that govern how passengers,
aircraft, or vehicles are routed, and then aggregates the results so that planners can assess
the needs of the network or a component of the airport to handle the estimated demand
• Typically the outputs from the other forecasting methods are used as inputs to simulation
models.
• Forecasts from simulation models represent snapshots of how a given amount of traffic
flows across a network or through an airport, rather than a monthly or annual estimate of
total traffic
Forecasting Methods
• A common approach being utilized more often today for preparing forecasts by judgment is
known as the
• Delphi method: In this method a panel of experts on a particular subject matter is asked to
rate or otherwise prioritize a series of questions or projections through a survey technique.
• The results of the survey are then distributed to the members of the panel and an
opportunity is provided for each member to reevaluate the original rating based upon the
collective ratings of the group.
• The reevaluation process is often sent through several iterations in order to arrive at a better
result
• In the Delphi method, the results of the technique do not have to represent a consensus of
the panel and, in fact, it is often quite useful to have a forecast which indicates the spread of
the panel in reaching conclusions on a particular issue

• The knowledge and consideration of the many diverse factors influencing aviation forecasts
usually improves the results.
• The disadvantages of this forecasting technique include the absence of statistical measures
on which to base the results and the inability, except in the most obvious cases, to gain a
significant consensus relative to the expected performance of the explanatory factors in the
future
Forecasting Methods
Time Series Method
• based upon an examination of the historical pattern of activity and assumes that those
factors which determine the variation of traffic in the past will continue to exhibit similar
relationships in the future
• This technique utilizes times series type data and seeks to analyze the growth and growth
rates associated with a particular aviation activity.
• Statistical techniques are used to assist in defining the reliability and the expected range/
confidence levels in the extrapolated trend
• From the variation in the trends and the upper and lower bounds placed on the forecast a
preferred forecast is usually developed

• In practice, trends appear to develop in situations in which the growth rate of a variable is
stable in either absolute or percentage terms, there is a gradual increase or decrease in
growth rate, or there is a clear indication of market saturation trend over time
• Quite often smoothing techniques are incorporated into the forecast to eliminate short run,
or seasonal, fluctuations in a pattern of activity which otherwise demonstrates a trend or
cyclical pattern in the long run
Forecasting Methods

Time Series Method

• It does not show a causal relationship between dependent and independent
variables.
• Thus degree of uncertainly increases with time.
• It is particularly useful for short-term forecasts in which the responsible
parameters are less dynamic.
Forecasting Methods
Market Share Method:
• Techniques which are utilized to proportion a large-scale aviation
activity down to local level are called market share, ratio or top-down
models.
• This method is widely used in aviation demand analysis.
• Historical data are examined to determine the ratio of local airport
traffic to total national traffic and trends are ascertained.
• Method is particularly useful in application in which it can be
demonstrated that the market share is a regular, stable or predictable
parameter.
Forecasting Methods
• Assumption is that the same relationship between regional annual
enplanements and annual enplanements at the airport will be maintained in
the future.
• A projection of % of regional annual enplanement captured at the study
airport is performed.
• Then forecast is made of regional annual enplanements.
• Study airport forecast % is applied to regional forecast to arrive at the forecast
of study airport.
Forecasting Methods
• Sometimes it is difficult to determine trends and thus a smoothing function is
applied to data to assist in identifying trend.
• A smoothing of data may be obtained by computing a running 3-year average of
data points.
• It indicates a slight upward trend in % of regional annual passengers captured by
study airport.
• The trend line while projected to design years, indicates the % for different years..
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Forecasting Methods
Econometric Model
• Most sophisticated and complex technique in demand forecasting
• There are economic, social, market and operational factors which affect aviation.
• To understand the impact of other sectors on aviation demand it is desirable to
use mathematical techniques (dependent and independent variables)
Multiple Linear Regression Equation is usually being used

• Sensitivity of forecasts is determined depending on the changes in explanatory

variables.
• If a design parameter being forecast varies considerably with change in
dependent variable and there is significant degree of unrealibility in the
independent variable, a great deal of confidence cannot be placed on the
equation.
Forecasting Methods
CLOSING REMARKS

• Perhaps the key to such a process is the recognition of the interaction of

demand to supply parameters

• The knowledge of the sensitivity of a physical facility component to a variation

in demand can lead to more informed decisions and an understanding of the
flexibility in facility design

• A continued monitoring of the need for physical facilities in light of changing

demand requirements provides a sound basis for the investment decision

• Recognition of the uncertainties in the demand forecasting process can prevent

a wasteful commitment of valuable resources
 simulation is defined as the process of creating a model of an existing or proposed system in order
to identify and understand those factors which control the system and/or to predict (forecast) the
future behavior of the system.
Almost any system which can be quantitatively described using equations and/or rules can be
simulated.
Simulation is a decision analysis and support tool. Simulation allows you to evaluate, compare and
optimize alternative designs, plans and policies.
Simulation should be used when the consequences of a proposed action, plan or design cannot be
directly and immediately observed and/or it is simply impractical or prohibitively expensive to test
the alternatives directly. For example, when implementing a strategic plan for a company, the
impacts are likely to take months (or years) to materialize. Simulation is particularly valuable when
there is significant uncertainty regarding the outcome or consequences of a particular alternative
under consideration. Perhaps most importantly, simulation should be used when the system under
consideration has complex interactions and requires the input from multiple disciplines.