Tuesday, August 29, 2006

Faking Demand

There is a hilarious and very level headed op-ed in the Korea Times today about the ineptitude of Korean Govrenment forecasting demand. The key graphs:

According to an agreement signed between the government and private enterprisers [for the new rail link between Kimpo and Incheon airports], the number of daily users for the train was forecast to reach 210,000 in 2007, 490,000 in 2010 and 670,000 in 2015.

However, the Incheon Airport Corporation views it differently. The number of daily airport users which now stands at 74,00, will grow to 80,000 in 2007, 100,000 in 2010 and 130,000 in 2015. Funny thing is that in the government estimate, the number of train users in 2010 is five times higher than the total expected number of airport users....

Officials of the Construction and Transportation Ministry belatedly explained that there was no way for them to verify what they had forecast. Another regrettable fact is that the amount of train losses to be covered by the government is only the tip of the iceberg...A case in point is the subway system. The growing deficits of subway operation in Seoul and other cities have been derived from the government failure to predict the number of users. The construction of Kimje Airport was stopped as a result of the revelation by the Board of Audit and Inspection that the demand forecast for the airport was fake.

If I can be the ultimate skeptic, should we call into question other government forecasts too?

Speaking of which, note the author relies somewhat on the premise that the Incheon Airport Co.'s figures are gospel. Given this, and his later citation of the Kimje Airport, what if they are inflated as well? Which means the rail passenger figures could be well above five times real usage of the Incheon Airport in 2010!


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