Widely recognised as one of the best airports in the world, Changi Airport provides excellent connectivity to the Asia Pacific region, making Singapore a vibrant aviation hub of choice. Changi Airport is served by many leading airlines and is an important hub for airline alliances such as Star Alliance and Oneworld, providing an important connection from ASEAN cities to ones in Europe and the United States.

There are currently 4 terminals in operations at Changi Airport and with the addition of the fifth terminal that is scheduled to be operational in 2030, Changi Airport will be able to cater to more than 135 million passengers per year.

As an intern at the airport, you have been provided with a set of aircraft traffic data (from January 1991 to December 2019) that shows the number of aircraft arrival and departure for each month and are required to analyse and do a projection of the aircraft traffic up to December 2021. This information will help the authority to decide if the pace of constructing Terminal 5 needs to be accelerated for completion ahead of 2030.

(a) Discuss which time period of the record should be used for this forecasting. Recommend an appropriate time series model to forecast the monthly aircraft traffic up to December 2021 with justifications.

(b) From Question 3(a)’s conclusion, determine the monthly forecast for aircraft traffic up to December 2021. Show the steps in calculating the forecast.