the CAA said - Heathrow Airport

CAP 1027
Chapter 3: Traffic Forecasts
Figure 3.1: Heathrow passenger traffic - 12 month rolling average
Source: CAA airport statistics, Q5 decision document
3.4 Traffic in Q5 was affected by the worldwide economic downturn
beginning in late 2008, which was not predicted when the Q5
forecasts were set. The CAA has been keen to learn lessons from Q5
and encouraged HAL and the airlines to develop a more robust ‘best
in class’ approach to traffic forecasting. HAL has adopted a new
traffic forecasting methodology for Q6, specifically producing output
for Heathrow only, which replaces the BAA methodology used in Q5
and which produced traffic forecasts for the London area, and for
Heathrow, Gatwick and Stansted separately.
3.5 HAL’s new methodology consists of two separate forecasting models:
an econometric model, which analyses likely future demand, and a
capacity model, which extrapolates from trends in supply and known
airline capacity plans. Both models include an allowance for noneconomic
demand ‘shocks’ and generate a probability distribution of
future traffic through a ‘Monte Carlo’ technique. 18
3.6 The econometric model is based on a regression analysis of
passenger traffic at Heathrow only for the period from 1996 until 2011,
against economic, cost and airline fare variables. Forecasts are
18
Each input is considered as a range of possibilities and multiple forecasts are generated. Each
uses particular input values chosen from those ranges.
April 2013 Page 43