In this study, a simulation model was developed in order to forecast and analysis of the air passenger demand and to determine when a capacity expansion in Istanbul Atatürk International Airport will be needed using System Dynamics approach. In thorough literature survey, it is found that airfare and runway utilization, level of service, population and Gross Domestic Products are key factors considered when creating models for air passenger demand. In this paper, we insert terror attacks as a new factor that may affect air transportation demand. Istanbul Atatürk International Airport and results show that although terror might have a negative effect other factors play a dominant role and a capacity expansion will be required until 2023.