An understanding of the market and the way it is likely to change with time is central to the planning of any business enterprise. Forecasting in air transport is particularly difficult because of the number of factors which influence the potential market (political, economic, social, environmental and technological) and because demand itself is very much influenced by the range of prices and qualities offered to the consumer. The lecture will review the purpose of forecasting and then examine the techniques of forecasting that are available in order to assess their usefulness in airline planning.

The preparation of a forecast is not an end in itself: rather it should be an essential and central element of the business activity. It should be part of the systematic search for opportunities and an aid to giving an overall direction to a business enterprise. For these reasons, forecasting should be seen as part of the mainstream of the planning activity and should not be left to isolated individuals in ‘backwater’ departments. Part of its value is in the formal evaluation of market intelligence and the understanding of the forces which are at work in the market place. Much of the benefit of a forecasting exercise will be lost if the ‘intelligence’ it generates is not diffused into the rest of the organisation. Similarly, line departments need to be involved in the forecasting process to help forecasters avoid ‘wishful thinking’ and pure ‘star gazing'.