Revamping passenger demand models for a post-COVID aviation world

With the aviation world slowly initiating a recovery from the capacity shock resulting from Covid-19, stakeholders within the industry – airports, airlines, regulators, governments, investors and lessors – require reliable demand forecasts in order to strategize and plan for the future. However, existing forecasts are invalid. Traditional forecasting methods must be adapted to the new conditions. In the article, Lufthansa Consulting proposes three key adaptations for revamping passenger demand models for a post-COVID aviation world.

1.    A new reality requires new indicators of demand, including elements such as Covid-19 related trends, traveler sentiment and post-crisis passenger behavior. This also necessitates new modes of data collection and management, often in real time 

2.    The future should be approached as four distinct segments, ranging from the immediate near term revival in 2020 to long term growth over a 20 year period. Each segment varies in the level of uncertainty and hence the factors driving traffic and the duration. Segregation of the forecast and applying a different approach to each allows one to group elements of uncertainty and tailor forecasting to the most relevant factors.

3.    Flexibility and inventiveness are essential to navigate a dynamic environment. That translates to regular updates of the forecasts and quick ‘test and learn’ trials for short term planning, and incorporating the potential effects of future shocks into mid or long term planning scenarios.

Read the article in full here

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