Forecasting vs. observed outturn: studying choice in faster inter-island connections

Abstract

Passenger demand and, in particular, mode choice between the islands of Gran Canaria and Tenerife has experienced important changes in the last decade. In 2005 the jetfoil, which had been the dominant mode for many years, was replaced by a slower but cheaper fast ferry service. This induced important changes in the market shares of all competing modes (airplane, slow ferry and another fast ferry with a shorter in-sea time, but needing a bus connection in land). We estimated several discrete choice models, with data collected two years before, with the aim to test their forecasting performance in relation with observed behaviour. Interestingly, we found that an easy to interpret multinomial logit model allowing for systematic taste variations performed best in forecasting. We also discuss some model assumptions related to forecasting that allow replicating the effects of introducing a new mode more accurately. We finally show how the model can be used to examine the social benefits of a related infrastructure improvement project in the island of Gran Canaria.