Why Combining Advanced Analytics and Commercial Insight Is Essential to Passenger Demand and Revenue Forecasting

Volume XVIII, Issue 48
December 21, 2016
by ,
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Major transport infrastructure, such as a high-speed rail line, is both extremely costly to develop and a significant driver of commercial and economic growth. For this reason investments must be built on thorough and well-tested business cases to ensure that the investment, whether by governments or private enterprise, delivers on its stated aims.

Passenger demand forecasting forms a central part of any such business case, as it helps determine the expected revenue which will support the investment, as well as informing the correct size, and frequency of operations required. However, forecasting passenger demand is highly complex, requiring a deep understanding of passenger behaviors, competing modes of transport and the influence of macroeconomic developments.

In this Executive Insights, L.E.K. Consulting applies a commercial and data-driven approach to create a view of passenger demand based on traveler behavior and preferences, population trends, economic growth forecasts and cost base constraints. In order to produce a comprehensive passenger demand forecast that includes a revenue assessment, we incorporated a commercial analysis on this forecast to determine how to create the best proposition for travelers’ needs.