Forecasting (aggregate) demand for US commercial air travel
We analyze whether it is better to forecast air travel demand using aggregate data at (say) a national level, or to aggregate the forecasts derived for individual airports using airport-specific data. We compare the US Federal Aviation Administration's (FAA) practice of predicting the total number of passengers using macroeconomic variables with an equivalently specified AIM (aggregating individual markets) approach. The AIM approach outperforms the aggregate forecasting approach in terms of its out-of-sample air travel demand predictions for different forecast horizons. Variants of AIM, where we restrict the coefficient estimates of some explanatory variables to be the same across individual airports, generally dominate both the aggregate and AIM approaches. The superior out-of-sample performances of these so-called quasi-AIM approaches depend on the trade-off between heterogeneity and estimation uncertainty. We argue that the quasi-AIM approaches exploit the heterogeneity across individual airports efficiently, without suffering from as much estimation uncertainty as the AIM approach.
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Van Garderen, K. J. & Lee, K. & Pesaran M., 1998.
"Cross-sectional Aggregation of Non-linear Models,"
Cambridge Working Papers in Economics
9803, Faculty of Economics, University of Cambridge.
- Benalal, Nicholai & Diaz del Hoyo, Juan Luis & Landau, Bettina & Roma, Moreno & Skudelny, Frauke, 2004. "To aggregate or not to aggregate? Euro area inflation forecasting," Working Paper Series 0374, European Central Bank.
- M. H. Pesaran & R. G. Pierse & M. S. Kumar, 1988.
"Econometric Analysis of Aggregation in the Context of Linear Prediction Models,"
UCLA Economics Working Papers
485, UCLA Department of Economics.
- Pesaran, M Hashem & Pierse, Richard G & Kumar, Mohan S, 1989. "Econometric Analysis of Aggregation in the Context of Linear Prediction Models," Econometrica, Econometric Society, vol. 57(4), pages 861-88, July.
- Giacomini, Raffaella & Granger, Clive W. J., 2004.
"Aggregation of space-time processes,"
Journal of Econometrics,
Elsevier, vol. 118(1-2), pages 7-26.
- Giacomini, Raffaella & Granger, Clive W.J., 2001. "Aggregationn of Space-Time Processes," University of California at San Diego, Economics Working Paper Series qt77f76455, Department of Economics, UC San Diego.
- Raffaella Giacomini & Clive W.J. Granger, 2002. "Aggregation of Space-Time Processes," Boston College Working Papers in Economics 582, Boston College Department of Economics.
- Profillidis, V.A, 2000. "Econometric and fuzzy models for the forecast of demand in the airport of Rhodes," Journal of Air Transport Management, Elsevier, vol. 6(2), pages 95-100.
- David F. Hendry & Kirstin Hubrich, 2011.
"Combining Disaggregate Forecasts or Combining Disaggregate Information to Forecast an Aggregate,"
Journal of Business & Economic Statistics,
Taylor & Francis Journals, vol. 29(2), pages 216-227, April.
- Hendry, David F. & Hubrich, Kirstin, 2011. "Combining Disaggregate Forecasts or Combining Disaggregate Information to Forecast an Aggregate," Journal of Business & Economic Statistics, American Statistical Association, vol. 29(2), pages 216-227.
- Hendry, David F. & Hubrich, Kirstin, 2010. "Combining disaggregate forecasts or combining disaggregate information to forecast an aggregate," Working Paper Series 1155, European Central Bank.
- Massimiliano Marcellino & James H. Stock & Mark W. Watson, .
"Macroeconomic Forecasting in the Euro Area: Country Specific versus Area-Wide Information,"
201, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.
- Marcellino, Massimiliano & Stock, James H. & Watson, Mark W., 2003. "Macroeconomic forecasting in the Euro area: Country specific versus area-wide information," European Economic Review, Elsevier, vol. 47(1), pages 1-18, February.
- Kohn, Robert, 1982. "When is an aggregate of a time series efficiently forecast by its past?," Journal of Econometrics, Elsevier, vol. 18(3), pages 337-349, April.
- Abed, Seraj Y. & Ba-Fail, Abdullah O. & Jasimuddin, Sajjad M., 2001. "An econometric analysis of international air travel demand in Saudi Arabia," Journal of Air Transport Management, Elsevier, vol. 7(3), pages 143-148.
- Aigner, Dennis J & Goldfeld, Stephen M, 1974. "Estimation and Prediction from Aggregate Data when Aggregates are Measured More Accurately than Their Components," Econometrica, Econometric Society, vol. 42(1), pages 113-34, January.
- Tobias, Justin & Zellner, Arnold, 2000.
"A Note on Aggregation, Disaggregation and Forecasting Performance,"
Staff General Research Papers
12024, Iowa State University, Department of Economics.
- Zellner, Arnold & Tobias, Justin, 2004. "A Note on Aggregation, Disaggregation and Forecasting Performance," Staff General Research Papers 12371, Iowa State University, Department of Economics.
- Saab, Samer S. & Zouein, Pierrette P., 2001. "Forecasting passenger load for a fixed planning horizon," Journal of Air Transport Management, Elsevier, vol. 7(6), pages 361-372.
- Fair, Ray C & Shiller, Robert J, 1990. "Comparing Information in Forecasts from Econometric Models," American Economic Review, American Economic Association, vol. 80(3), pages 375-89, June.
- Granger, C. W. J., 1987. "Implications of Aggregation with Common Factors," Econometric Theory, Cambridge University Press, vol. 3(02), pages 208-222, April.
- Òscar Jordà & Massimiliano Marcellino, 2008.
"Path Forecast Evaluation,"
Economics Working Papers
ECO2008/34, European University Institute.
- Cline, Richard C. & Ruhl, Terry A. & Gosling, Geoffrey D. & Gillen, David W., 1998. "Air transportation demand forecasts in emerging market economies: a case study of the Kyrgyz Republic in the former Soviet Union," Journal of Air Transport Management, Elsevier, vol. 4(1), pages 11-23.
- Granger, C. W. J., 1980. "Long memory relationships and the aggregation of dynamic models," Journal of Econometrics, Elsevier, vol. 14(2), pages 227-238, October.
- Wang, P.T. & Pitfield, David, 1999. "The derivation and analysis of the passenger peak hour: an empirical application to Brazil," ERSA conference papers ersa99pa239, European Regional Science Association.
- Ito, Harumi & Lee, Darin, 2005.
"Assessing the impact of the September 11 terrorist attacks on U.S. airline demand,"
Journal of Economics and Business,
Elsevier, vol. 57(1), pages 75-95.
- Harumi Ito & Darin Lee, 2003. "Assessing the Impact of the September 11 Terrorist Attacks on U.S. Airline Demand," Working Papers 2003-16, Brown University, Department of Economics.
- A. Espasa & E. Senra & R. Albacete, 2002. "Forecasting inflation in the European Monetary Union: A disaggregated approach by countries and by sectors," The European Journal of Finance, Taylor & Francis Journals, vol. 8(4), pages 402-421.
- Wang, P.T & Pitfield, D.E, 1999. "The derivation and analysis of the passenger peak hour: an empirical application to Brazil," Journal of Air Transport Management, Elsevier, vol. 5(3), pages 135-141.
- Lutkepohl, Helmut, 1984. "Forecasting Contemporaneously Aggregated Vector ARMA Processes," Journal of Business & Economic Statistics, American Statistical Association, vol. 2(3), pages 201-14, July.
When requesting a correction, please mention this item's handle: RePEc:eee:intfor:v:27:y::i:3:p:923-941. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Zhang, Lei)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.