This blog was written by Faical Allou, Business Developer at Skyscanner, recapping his talk at Routes Europe earlier this week.
Another conference, another keynote that I think will be interesting for most readers, so here is a run-down and the presentation below.
When there is a no direct flight from A to B, people tend to travel less; this is common sense, but it can be forgotten when planning new routes. Airline network planning for future time periods (season, years) is based at its core on estimated traffic flown the previous year(s).
We take the estimate of traffic from the previous year and we add a "growth factor" (typically 2x the GDP growth or some variation of that) and that number becomes the market size for next year.
If there was no traffic last year between A and B, there won't be next year ... and of course if there is no traffic, airlines don't fly so there won't be traffic etc etc ...
Traffic is a result of demand but is also, to a large extent, constrained the service available.
The market sizes as we know them need to change:
- Users don't start their journey at the airport: they start from home, and can take ground transport to the next airport. Market sizes should therefore be defined at a city level, meaning city, like Orleans, France, not IATA city code.
- Demand is not traffic, demand is the number of people potentially interested to travel; some of them fly, some of them don't. This means there could be different degrees of potential "intent", and the best way to estimate this is to look at the number people who search for travel.
Here is a presentation on these concepts, with a specific use case for Manchester (MAN) to Seville (SVQ).
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