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Commercial strategy, Expert view

Using data to enhance forecast and demand planning for airports

November 10, 2021

The biggest hurdle now facing the aviation industry is that the models previously depended upon to forecast demand no longer work, particularly for near-term forecasting.

In our recent Cirium Live: Southeast Asia and South Asia Airports webinar, a panel of Cirium experts discussed how airports can leverage data to gain insights on their airline customers and enhance their forecast and demand planning which is vital for the airport’s strategic planning.

Here are the key messages from Cirium’s Henk Ombelet, Head of Advisory Operations; Herman Tse, Aviation Analyst and Kanishka Chatterjee, Business Solutions Consultant in the webinar session moderated by Ning Lek.


The challenges ahead

Airport demand forecasting plays an integral role in forming an airport’s wider strategic plans for operations, infrastructure and facilities for passengers.

The biggest hurdle now facing the aviation industry is that the models previously depended upon to forecast demand no longer work, particularly for near-term forecasting.

By looking back at historical events, such as SARS or past financial crises, Ascend by Cirium developed several scenarios and signposts to enhance its capability, helping both airports and airlines.

Cirium is currently monitoring in real-time:

  • The rate of COVID-19 cases and pace of the vaccine rollout
  • GDP data
  • Demand recovery – including IATA traffic releases, forward schedules, airline announcements of network, flights flown, cancellation rates and travel agent surveys
  • Regulatory restrictions that impact international travel and the timing of the easing of restrictions on domestic, intra-regional and intercontinental travel
  • Airline environment – airline bankruptcies, lease returns, lease rates and market values
  • Fleets – in-service and utilization levels, load factor
  • OEM production at minimum viable rates

The scenarios presented at the webinar has since been updated.  Cirium’s latest projection, Scenario 6 expects global recovery 12 months ahead of the previous baseline, Scenario 4.

Gaining insights on airlines

Airline fleet planning, network development and operations are closely linked to airport development and traffic forecast. Hence, it is important to understand airline trends for airport strategic planning.

With the changing outbreak situations, airlines are now far more experienced to cope with demand fluctuations, to cancel flights at short notice to avoid high operating costs.

Airline trends shared:

  • Pre-pandemic in January 2020, the total number of active aircraft was around 5,000 and the storage was only at 9%.  Now, Asia Pacific in-service fleet appears to have stabilized at around 3,600 aircraft despite recent declines.  Aircraft are being returned to service gradually and the storage rate is now around 36% with still some time for recovery.
  • Asia Pacific fleet utilization is showing signs of recovery. Twin-aisle aircraft is at the highest level since onset of the pandemic, while single-aisle aircraft is still well down but trending upwards again.
  • Tracking of airline bankruptcies and liquidations is crucial as any suspension of services will directly impact the airport and the network connectivity.  Airports need to be constantly updated of market changes and work closely with the airlines to maintain the connectivity, particularly city-pairs that may not be resumed after the pandemic.

Essential data for accurate airport demand forecasting

Airports can be more successful by understanding their airline customers. To achieve this, they must have access to comprehensive and reliable data addressing four key areas of operations.

  • Analyse existing routes, market share, operating airlines, load factors and competitors’ routes for preliminary risk screening. Consider routes that airports could develop for commercial or connectivity purposes, ensuring they are financially viable.
  • Select potential routes and rank the priority.
  • Analyse the routes from a financial perspective including profit and loss, internal rate of return and payback period etc.
  • Identify target airlines and present a business case proposal to the air service marketing team.

The new and unpredictable patterns in passenger demand and capacity requirements have increased the need for both qualitative and quantitative data, together with expert insights to better understand the market and create a more accurate demand forecast.  

With a top-down approach, our experts look at macro-economic considerations, industry developments and then drill it down to airports and stakeholders’ level.  Data collection and validation is integral to these processes.  A comprehensive forecast model that consists of in-house data and experts’ judgment is used to generate forecast scenarios of air traffic forecast.

Looking beyond the regular data sets to stay ahead

To get a greater understanding of airline (customer) perspectives, and in turn increase the airports’ success rate for route development cases, our experts recommend looking at these data sets:  

  • Airline strategy – analyze airlines’ network to gain synergies
  • Completed flights – compare actual flown flights/seats vs scheduled flights
  • Fleet composition – current fleet mix, fleet in-service vs in storage, order book
  • Aircraft utilization – benchmark utilization against comparable carriers to assess whether the fleet is under utilized
  • Other metrics – peak and off-peak hours at the airport, alliance partners’ schedules, connectivity with alliance partners, on-time performance 

To conclude, our experts are calling out to airports to plan ahead and develop long-term strategies for full recovery – adopt an agile approach for a dynamic market, using both quantitative and qualitative data to make the best decisions for strategic planning.  


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