Know your sources: how reliable and accurate are the various industry traffic and forecasting services?

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Peter Marshall: Peter, there is a plethora of different sources in the market today, providing past and forecast traffic data. And they invariably do not match. This can be frustrating to analysts and marketers as they project sales data based on conversion rates from these traffic figures.

So, which sources are correct in your view – none or just a few?

Peter Mohn: Well, equally frustrating, Peter, is the ambiguous answer that all may be correct, but in varying degrees of precision! The key is understanding how representative the data sources are and aiming to get the most complete and accurate picture of the traffic data.

Peter Marshall: Are all forecast traffic solutions measuring the same data?

Peter Mohn: Well, the complication and confusion around traffic data stems from the fact that not all may give the full picture, and it is certainly ill-advised to try and compare one source to another. The first and most important element to note is that some sources are airline traffic forecasting tools , while others obtain the data from airport-supplied information. And there will inevitably be differences. The way both are measured is actually quite different and provide different data. It’s vital to know, therefore, whether the source of the traffic data is from airports or airlines and whether the methodology provides full airline sales or passenger data, or only partial.

For example, airports often count transit passengers twice, while airline traffic tools such as IATA’s traffic data tool would only count a transit passenger once. This effectively means that airport traffic data is often significantly higher that airline traffic data.

Peter Marshall: So what are the fundamental differences between the way airports and airlines measure their traffic data?

Peter Mohn: The nationality model developed by IATA, which is the model used within m1ndset’s Business 1ntelligence Service (B1S), is based on a database that contains 99% of world traffic for revenue passengers, reported on a monthly basis. This methodology excludes non-paying passengers, such as airline employees who travel for free (or nearly free), and babies and children (lap infants), who do not have a seat of their own. But it does count passengers who paid for their trip with a frequent flyer programme.

The ”headcounts” methodology used by airports, on the other hand, are survey samples with varying methodologies to capture data by nationality. These are subjected to the airport or authority conducting the study and cannot be compared globally, as each airport might use different approaches, definitions and coverage.

urvey samples with varying methodologies to capture data by nationality.

So, there are a number of reasons why these airport traffic surveys may differ from one airport to another – including the transit passenger question, how Schengen zone passengers are counted in Europe and inclusion of non-revenue passengers, to name but a few. In short, the airlines benefit from a unified approach through the IATA database, while airports’ measurement is multiple and varied. Both will provide accurate data, but benchmarking is more challenging in the latter scenario.

Peter Marshall: Does this then mean that all airline traffic tools are accurate and consistent?

Peter Mohn: As I said, the statistics reported by the various data companies will invariably be correct. But it’s vital to understand how the traffic data is compiled to understand how representative the data is. While the airline data gives the most accurate picture globally, not all airline traffic sources give the full picture. Check out the recent article on the MoodieDavittReport, which discusses the complexity of IATA’s traffic data and forecasting solutions, other data sources do not include direct airline sales and only provide traffic data based on global distribution systems (GDS) used by travel agencies. This means they will miss out on a significant proportion of data, as these sources represent less than half the overall market. While the year-on-year evolution will give some idea on growth, it will certainly not give the full picture on actual passenger numbers.

In short, when analysing traffic data and forecasts as part of forward planning and budgeting exercises, it’s important to know the full scope of the traffic data source – whether it’s from airports or airlines. And if it is the latter, whether all airline bookings are included or only part of the picture. The industry needs to have the full picture and data providers need to be completely open as to just how representative and reliable their data is.

* For more information on m1ndset’s B1S, contact Pablo Saez Gil:
Peter Mohn can be contacted on: +41 21 925 5025.