Question

what are the  the applications of various Time Series Models in the context of prices of airlines ticket like low budget carriers

Answer 1

In practice a suitable model is fitted to a given time series and the corresponding parameters are estimated using the known data values. The procedure of fitting a time series to a proper model is termed as Time Series Analysis. It comprises methods that attempt to understand the nature of the series and is often useful for future forecasting and simulation. In time series forecasting, past observations are collected and analyzed to develop a suitable mathematical model which captures the underlying data generating process for the series. The future events are then predicted using the model. This approach is particularly useful when there is not much knowledge about the statistical pattern followed by the successive observations or when there is a lack of a satisfactory explanatory model. Time series forecasting has important applications in various fields. Often valuable strategic decisions and precautionary measures are taken based on the forecast results. Thus making a good forecast, i.e. fitting an adequate model to a time series is vary important. Over the past several decades many efforts have been made by researchers for the development and improvement of suitable time series forecasting models.

A time series is non-deterministic in nature, i.e. we cannot predict with certainty what will occur in future. Generally a time series {x(t),t = 0,1, 2,...} is assumed to follow certain probability model [21] which describes the joint distribution of the random variable .t x The mathematical expression describing the probability structure of a time series is termed as a stochastic process [23]. Thus the sequence of observations of the series is actually a sample realization of the stochastic process that produced it. A usual assumption is that the time series variables t x are independent and identically distributed (i.i.d) following the normal distribution., an interesting point is that time series are in fact not exactly i.i.d; they follow more or less some regular pattern in long term. For example if the temperature today of a particular city is extremely high, then it can be reasonably presumed that tomorrow’s temperature will also likely to be high. This is the reason why time series forecasting using a proper technique, yields result close to the actual value.

Over the past two decades the low-cost airline business model has grown excessively. Among the successful low-cost carriers Southwest Airlines, which operates in the United States and Ryanair, which operates in Europe can be named. The LLC model addresses to business strategies, which lessen the cost of the airline. Typical cost-saving practices include :

• operating at secondary airports;
• flying a single airplane type;
• increasing airplane utilization;
• relying on direct sales;
• offering a single-class product;
• avoiding frequent-flyer programs;
• keeping labor costs low.

Such tactics helped LCCs reduce unit cost by 20 percent to 40 percent compared with network carriers. Low-cost carriers substantially stimulate traffic by reducing fares. Hence, LLC business model has demonstrated success all around the world and has encouraged the increase in air travel. Substantially, there are two kinds of low-cost business models in Europe: Ryanair on the one hand and Easy Jet on the other. easy Jet uses high-cost airports in most cases and secondary airports at rather low regularity. It concentrates on existing leisure and business markets and new leisure markets with no direct competition. In contrary, Ryanair focuses mostly on costs, not on the markets. Airline company steadily convinces airports and suppliers to lower charges.

The elements, which are mentioned above concerning the strategies of LLC business model, compose the vital difference between traditional carriers and low-cost ones – that is, the difference in the cost.

Cost per available seat kilometers (CASK) or cost per available seat miles (CASM) are most universally used metric to determine the cost of the airline. “CASM calculates the cost of operating one available seat per mile/kilometer. This metric can be used to compare a variety of costs, ranging from fuel to labor. Total CASM or CASK normally includes all direct operating costs such as fuel, labor, maintenance, and other direct expenses (landing fees, capital equipment charges, and so on), as well as indirect or nonoperating costs, including station and ground expenses, passenger services, ticketing, sales, promotion, and general administration costs.” (Schlumberger, 2014, p. 15) Indirect operation costs are fixed costs, when direct operating costs are variable costs, which depend on many factors, such as type of aircraft used, number of flights, stage lengths ect. Even though CASM is relevant indicator in the analysis of airlines performance, it can demonstrate obstacles to examine unit costs on the global level because of abundant variation in basic costs across the regions. A traditional airline can operate at analogous unit cost to a European low-cost carrier, making a collation only based on unit cost futile. (Schlumberger, 2014) This has to be considered while making a comparison between low-cost airlines and traditional airlines across the regions.

Furthermore, low-cost airlines are still experiencing growth rates that are above average in the industry. This type of carriers is also facing customers expectation that tend to increase even more, especially in developed markets. Thus, it is crucially important for low cost airlines to find the balance between investing into experience improvement and preserving their cost advantage.

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Answer 2

In practice a suitable model is fitted to a given time series and the corresponding parameters are estimated using the known data values. The procedure of fitting a time series to a proper model is termed as Time Series Analysis. It comprises methods that attempt to understand the nature of the series and is often useful for future forecasting and simulation. In time series forecasting, past observations are collected and analyzed to develop a suitable mathematical model which captures the underlying data generating process for the series. The future events are then predicted using the model. This approach is particularly useful when there is not much knowledge about the statistical pattern followed by the successive observations or when there is a lack of a satisfactory explanatory model. Time series forecasting has important applications in various fields. Often valuable strategic decisions and precautionary measures are taken based on the forecast results. Thus making a good forecast, i.e. fitting an adequate model to a time series is vary important. Over the past several decades many efforts have been made by researchers for the development and improvement of suitable time series forecasting models.

A time series is non-deterministic in nature, i.e. we cannot predict with certainty what will occur in future. Generally a time series {x(t),t = 0,1, 2,...} is assumed to follow certain probability model [21] which describes the joint distribution of the random variable .t x The mathematical expression describing the probability structure of a time series is termed as a stochastic process [23]. Thus the sequence of observations of the series is actually a sample realization of the stochastic process that produced it. A usual assumption is that the time series variables t x are independent and identically distributed (i.i.d) following the normal distribution., an interesting point is that time series are in fact not exactly i.i.d; they follow more or less some regular pattern in long term. For example if the temperature today of a particular city is extremely high, then it can be reasonably presumed that tomorrow’s temperature will also likely to be high. This is the reason why time series forecasting using a proper technique, yields result close to the actual value.

Over the past two decades the low-cost airline business model has grown excessively. Among the successful low-cost carriers Southwest Airlines, which operates in the United States and Ryanair, which operates in Europe can be named. The LLC model addresses to business strategies, which lessen the cost of the airline. Typical cost-saving practices include :

• operating at secondary airports;
• flying a single airplane type;
• increasing airplane utilization;
• relying on direct sales;
• offering a single-class product;
• avoiding frequent-flyer programs;
• keeping labor costs low.

Such tactics helped LCCs reduce unit cost by 20 percent to 40 percent compared with network carriers. Low-cost carriers substantially stimulate traffic by reducing fares. Hence, LLC business model has demonstrated success all around the world and has encouraged the increase in air travel. Substantially, there are two kinds of low-cost business models in Europe: Ryanair on the one hand and Easy Jet on the other. easy Jet uses high-cost airports in most cases and secondary airports at rather low regularity. It concentrates on existing leisure and business markets and new leisure markets with no direct competition. In contrary, Ryanair focuses mostly on costs, not on the markets. Airline company steadily convinces airports and suppliers to lower charges.

The elements, which are mentioned above concerning the strategies of LLC business model, compose the vital difference between traditional carriers and low-cost ones – that is, the difference in the cost.

Cost per available seat kilometers (CASK) or cost per available seat miles (CASM) are most universally used metric to determine the cost of the airline. “CASM calculates the cost of operating one available seat per mile/kilometer. This metric can be used to compare a variety of costs, ranging from fuel to labor. Total CASM or CASK normally includes all direct operating costs such as fuel, labor, maintenance, and other direct expenses (landing fees, capital equipment charges, and so on), as well as indirect or nonoperating costs, including station and ground expenses, passenger services, ticketing, sales, promotion, and general administration costs.” (Schlumberger, 2014, p. 15) Indirect operation costs are fixed costs, when direct operating costs are variable costs, which depend on many factors, such as type of aircraft used, number of flights, stage lengths ect. Even though CASM is relevant indicator in the analysis of airlines performance, it can demonstrate obstacles to examine unit costs on the global level because of abundant variation in basic costs across the regions. A traditional airline can operate at analogous unit cost to a European low-cost carrier, making a collation only based on unit cost futile. (Schlumberger, 2014) This has to be considered while making a comparison between low-cost airlines and traditional airlines across the regions.

Furthermore, low-cost airlines are still experiencing growth rates that are above average in the industry. This type of carriers is also facing customers expectation that tend to increase even more, especially in developed markets. Thus, it is crucially important for low cost airlines to find the balance between investing into experience improvement and preserving their cost advantage.

I've tried my best providing the information requested by you.If you like my answer,please leave an up-vote.It is highly appreciated.Thanks in advance.