Simulation vs. historical forecasts
Copy images from slide and expand bullet points in terms of relevance of forecasting techniques:
•Department for Transport forecasts perform well vs. actual air traffic growth during periods of relative stability, but significant errors appear when major shocks are encountered :
•2003 – 2007 average error = 1.6%
•2007 – 2012 average error >30% (economic crisis)
•Financial disruptions had far bigger impact on forecasting accuracy than terrorist attacks: demonstrates uncertainty in forecasting any sector closely linked to state of economy
•Very broad range of possible outcomes can be predicted by just varying oil price and GDP variation