Forecasting air passenger traffic and market share using deep neural networks with multiple inputs and outputs

In this study, we address the challenge of accurate time series forecasting of air passenger demand using historical market demand data from the U.S. commercial aviation industry in the 21st century. Commercial aviation is a major contributor to the U.S. economy, directly or indirectly generating ~US$1.37 trillion annually, or 5% of annual GDP, and supporting more than 10 million jobs (Airlines for America, 2024). Over 1 billion passengers flew through U.S. airports in 2023 (Bureau of Transportation Statistics, 2024a). Using multiple correlated time series inputs predicts future values of multiple interrelated time series and leverages their mutual dependencies to enhance accuracy.

In this study, we introduce a two-stage algorithm employing a deep neural network for correlated time series forecasting, addressing scenarios where multiple input variables are interrelated. This approach is designed to capture the influence that one time series can exert on another, thereby enhancing prediction accuracy by leveraging these interdependencies. In the first stage, we fit four Recurrent Neural Network (RNN) models to generate accurate univariate forecasts, each functioning as a single input-output model to predict aggregated market demand. The Gated Recurrent Unit (GRU) model was the top performer for our dataset overall. In the second stage, we apply the best fitted model (GRU Model) from Stage 1 to each individual competitor (disaggregated from the market) and then merge all input tensors using the Concatenate function.

We hope to contribute to the relevant body of knowledge with a deep neural network framework for forecasting market share among competitors in the U.S. commercial aviation industry, as no similar approach has been documented in the literature. Given the importance of the industry, there is potentially great value in applying sophisticated forecasting techniques to achieve accurate predictions of air passenger demand. Moreover, these techniques may have wider applications and can potentially be employed in other contexts.