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New Methods to Forecast Passenger Demand. Part 2 PDF Print E-mail
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Written by Courtney Miller   
Wednesday, 20 September 2006

   The legacy carrier-dominated market of DFW - ORD showed signs of resiliency after September 11, 2001.  With prediction errors of 9.88% before Q3, 2001, 16.82% during Q3, 2001 to Q2, 2002, and 10.7% from Q3, 2002 to Q3, 2005, the effects of September 2001 on passenger boardings is relatively small; however, this is largely due to the decrease in fares over the period.  In Q2, 2001, the average non-stop fare was $285, yet in subsequent years that number drops to $252, $225, $204 and finally the lowest value of $197 in Q2, 2005.  With capacity remaining constant and fares decreasing in such a manner, profitability of this route would be severely impacted.  This route is similar to many non-stop routes across the U.S., since both American and United Airlines are offering service from a hub.  Since the vast majority of domestic routes originate or terminate at a hub, the same conclusions can be loosely applied to each.  The DFW - MDW route showed a stronger correlation between its non-stop fare and total non-stop passengers (.23) compared to the DFW - ORD route (.09), and is indicative of low cost carrier American Trans Air's presence in that market.  Once again, the fares of a competing market have a larger impact on passenger boardings than the fares of the actual market being tested.  In this case, American Trans Air is dictating ticket prices on all markets between Dallas and Chicago.

   September 11, 2001, adversely affected each route to some degree, however none as much as the LGA - DCA market.  Even though the overall effects were muted on strong business markets such as this one, this route was subject to one major restriction that no other market in this research was,  the closure of the DCA airport in Q3, 2001.  This also affected the integrity of the neural network predictions, in that before Q3, 2001, the network had no data from which to predict how the route would react to such a closure.  Also, after the effects of September 11 were compensated for, the original data during that time period was used to predict future boardings, which it did not do very well.  Once again, fares did not show a strong correlation and an excellent example of this is between Q1 and Q2, 2005, when fares jumped from $128 to $139 with no increase in capacity and resulting in an overall increase in passengers from 264,870 to 321,940.  The increase in passengers after an increase in fares seems to suggest that a separate factor other than what was used in this study was influential in the route's passenger boardings.

 


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