Good Things Take Time – Building up an O&D-Forecaster Stefan Poelt Presentation to the AGIFORS RES & YM Study Group Berlin, 16 - 19 April 2002

Good Things Take Time –

Building up an O&D-Forecaster

Stefan Poelt

Presentation to the AGIFORS RES & YM Study Group

Berlin, 16 - 19 April 2002

O&D Forecaster • page 2

Agenda

What’s the scope of our O&D project ?

Some traps to watch

O&D Forecaster system overview

What’s the current status ?

How does a perfect project look like ?

Happy end !


How does a perfect project look like ?

A perfect project

Is in time

Is in budget

Covers the scope

Delivers quality

Our project

Is not quite in time

Is in budget

Scope has been adjusted

Delivers quality


What’s the scope of our O&D project ?

O&D Forecasting

Detailed level

Individual pax / groups

Gross bookings / cancellations

Aggregation of ‘exotic’ O&Ds

Implemented by Lufthansa Systems Berlin

PNR-basedNo-show

Forecasting

PNR attributes

Decision tree learning

Mixed with traditional no-show forecasts

No decision about vendor

O&D Optimization

Benchmark study

Project stopped after 11 Sep 2001

Re-activation in 2003

Implemented by CRSs

Married Segment Control

Prevents cheating

Implemented at Inventory Dept.

Coordination task


Simple vs. complex forecast method

Separation of individual and group bookings

Separation of gross bookings and cancellations

Flexible aggregation of low demand traffic flows

Complex methods are more difficult to calibrate

Complex methods can better model reality

Trade-off between accuracy and stability

Pilot‘sWeather Forecast Station

Stone is wetStone is dryShadow at groundWhite on topStone can’t be seenStone swingsStone is hoppingStone disappeared

RainNo rainSunnySnowFogStormyEarthquakeBlizzard


Better no-show forecasts allow better overbooking

Traditional no-show forecasts are based on booking class and routing

PNR is a richer data source (e.g. ticketing info, special service request etc.)

‘There’s gold in the PNR data mine’ (Louis Busuttil, PROS Conference 1997)

‘PNR-based no-show forecast’ (Klaus Weber, AGIFORS Conference 2000)

PNR-based methods can be applied to booked passengers only - they must be mixed with traditional no-show forecasting

PNR-based methods (e.g. decision trees) can also be applied to cancellation forecasting


O&D forecasting without O&D optimization

Intermediate step: O&D forecasts aggregated to leg-level and used in leg-optimization

Better quality of leg demand forecasts

Better quality of (PNR-based) no-show forecasts lower overbooking risk

O&D information, better understanding of travel flows

Better communication and co-operation with Pricing and Scheduling / Flight Planning


Reasons for delay

Too optimistic project plan

Internal staffing (6-7 project members, 4 users – part-time)

Under-estimation of noise in PNR data

Frequent change of project management

Scientific driven project – late involvement of users

Research and calibration effort for new topics (e.g. cancellations)

Re-organizations

11. September 2001


Renaming the project does not help

There were plans to rename the project to ‘O&D-Forecaster’

This might help to confuse controllers but does not help to solve the problems

Project name: ‚Bid Price 2‘

Original scope was adjusted, O&D-optimization was stopped after 11. September 2001


Shit happens

There are many situations where something can go wrong

The business processes haven’t been addressed at the beginning

Later on we realized that important functionalities are missing

Noise and complexity of PNR data have been under-estimated

Aggregation of no-show information from O&D to leg is problematic


A precise specification avoidscomplaints later-on

Innovative IT-projects require a lot of research

Alternation of research and prototyping / implementation

We decided to refine the specification during the project

Problems keeping specification and documentation up to date

Testing with ‘fuzzy’ specification is challenging

You‘ve builtit up reversed !


A good documentation is important

Documentation often is prioritized down

Good documentation improves user’s confidence

3 documents:

– system administration

– user manual / online help

– process / workflow

PRESSANY KEY


In a perfect project: Project managers have the right perspective

Focusing on the most important topics

Understanding the subject (RM and Forecasting)

Good communication and motivation skills

Currently 2 project managers, one focusing on management, the other focusing on methods - learning from each other


In a perfect project: Motivation of the project team is not an issue

Working for years on the same thing is boring

We are the 4. generation of project managers

The project survived 2 re-organizations

Increase motivation by changing responsibilities

Success is the best motivator !


Our new toy

Availabili-ties

FlightSchedule

Model Mixer

Leg Optimizer

Forecaster Pool

UserInfluence

ValidatorSegment

Aggregation

ExponentialSmoothing/Brown

InductionTrees

ODI Forecast DB

Bad Data Processor

Data Loading

PNR-Data

Trip-Builder

Forecast Building

Forecast Kernel

ForecastInterface DB

Shadow

History BuilderUnconstrainingOutlier Detection

Flight Monitor

PNR-Interpreter

History Pool

Concept

Attractivities

ODO-Builder

AV-Calculator

ActualData

Event &SeasonalityManager

ForecastController


Aggregation solves the small numbers problem

There are many low traffic O&Ds

20:90 rule - 20% of all O&Ds cover 90% of the traffic

Flexible aggregation of low traffic O&Ds is a key factor


Effects of schedule changes are handled automatically

A major schedule change can affect thousands of O&Ds

Concept of Lufthansa Systems Berlin handles new, moved and cancelled flights

Demand is automatically adjusted based on ‘neighbored’ flights/paths

‘Distance’ to neighbored flights mainly depends on departure and arrival times

Approximation of market (passenger choice) model

new flight

neighbored flights

flight A flight B

flight C

dist(A,C) dist(B,C)


This year we will take the last hurdle

Forecast quality (aggregated to leg-level) is better than for current system

Data loading performance is o.k.

Business processes have been re-designed and matched with the tool

Flight by flight migration of new forecast system (Jun - Nov 2002) minimizes risk

Business re-organization will go hand in hand with migration

Parallel project of O&D-reporting is started

Married Segments Control is implemented in Amadeus and Galileo


The forecast results are very promising

Validation of O&D-forecaster at representative test flights

Distinction of open and closed flights to separate unconstraining effects

Open flights are less important but have reliable actual values

Open Flights

Err

or

Current system O&D-Forecaster

Closed Flights

Err

or

Current system O&D-Forecaster

Booking period departure Booking period departure


Happy end !

The O&D forecaster will be completely in operation this year

Very good cooperation with Lufthansa Systems Berlin

O&D not always means Odd & Delayed !

Documents

Good Things Take Time – Building up an O&D-Forecaster Stefan Poelt Presentation to the AGIFORS RES & YM Study Group Berlin, 16 - 19 April 2002