Estimating Regional Air Transportation Demand in the Asia-Pacific Region
Embry Riddle Aeronautical University Worldwide
MBAA 523: Advanced Aviation Economics
Estimating Regional Air Transportation Demand – Asia Pacific
14 Sep 2013
Table of Contents
1) Introduction
1.1) Boeing’s forecasting methodology
Boeing uses both top-down and bottom-up approaches to analyse the market situation from 2013 to 2032. Bottom-up approach was done by taking into account of forecasting the economic predictions, growth momentum, historical trends, travel attractiveness, domestic air regulation etc. (Boeing, 2013). It also included the statistical reports and trends from the government and tourism info. Top-down analysis was performed by projected on aggregated variables. Both the approaches were finally reconciled using statistical method to verify the data collected. It has segmented the world air travel into various regions of the world and it shows the effects of industry and airline business development models.
As mentioned by Doganis (Doganis, 2010), Boeing also uses various forecasting methods to predict the market condition for upcoming years. Some of the techniques may be the qualitative models, time-series projections (linear and exponential) which include the exponential smoothing of the data collected, Econometric or causal methods etc. But the basic philosophy behind the forecasting techniques used by the Boeing is based on economy’s GDP. The measure of air travel, Revenue passenger kilometres (RPKs) is based on GDP and the expression is RPK (growth) = GDP (growth) + f(t), where f(t) is the time varying function. And it is very clear that Boeing is considering time (t) as the independent variable and the RPKs changes with respect to time factors. It says that around 60% to 80% is contributed by GDP and the remaining 20% to 40% from the travel situation of the travellers (Boeing, 2013) (Figure ). The forecasting analysis is done by considering the factors like fuel, market liberalization, airline
MBAA 523: Advanced Aviation Economics
Estimating Regional Air Transportation Demand – Asia Pacific
14 Sep 2013
Table of Contents
1) Introduction
1.1) Boeing’s forecasting methodology
Boeing uses both top-down and bottom-up approaches to analyse the market situation from 2013 to 2032. Bottom-up approach was done by taking into account of forecasting the economic predictions, growth momentum, historical trends, travel attractiveness, domestic air regulation etc. (Boeing, 2013). It also included the statistical reports and trends from the government and tourism info. Top-down analysis was performed by projected on aggregated variables. Both the approaches were finally reconciled using statistical method to verify the data collected. It has segmented the world air travel into various regions of the world and it shows the effects of industry and airline business development models.
As mentioned by Doganis (Doganis, 2010), Boeing also uses various forecasting methods to predict the market condition for upcoming years. Some of the techniques may be the qualitative models, time-series projections (linear and exponential) which include the exponential smoothing of the data collected, Econometric or causal methods etc. But the basic philosophy behind the forecasting techniques used by the Boeing is based on economy’s GDP. The measure of air travel, Revenue passenger kilometres (RPKs) is based on GDP and the expression is RPK (growth) = GDP (growth) + f(t), where f(t) is the time varying function. And it is very clear that Boeing is considering time (t) as the independent variable and the RPKs changes with respect to time factors. It says that around 60% to 80% is contributed by GDP and the remaining 20% to 40% from the travel situation of the travellers (Boeing, 2013) (Figure ). The forecasting analysis is done by considering the factors like fuel, market liberalization, airline
Bibliography: Boeing. (2013). Current Market Outlook 2013 - 2032. Seattle, WA: Boeing Commercial Airplanes. Doganis, R. (2010). Flying Off Course - Airline Economics and Marketing. London and New York: Routledge.