Millennials And Their Increasing Contribution Toward Air Travel

by Trefis Team
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A recent report by the International Air Transport Association (IATA) forecasts passenger demand for air travel to double over the next two decades, as people “trade, explore, and share the benefits of innovation and economic prosperity.” Growing at a compound annual rate of 3.7% per annum, the number of global passengers are expected to reach 3.7 billion by 2035. This rise in demand can potentially have profound effects on the aviation industry, by increasing revenues and subsiding yield headwinds.

Millennials Spending On Air Travel

Millennials are one of the main contributors towards the aforementioned growing demand of air travel. The millennial generation has taken over from the baby boomers as the single largest generation by population. Although millennials mainly traveled for leisure earlier, they are expected to become the biggest group by percentage towards business travel. 07127

Currently, the travel industry is driven by baby boomers’ travel needs. However, in the next decade the millennial generation will enter their peak earning, spending, and traveling years. Their spending on business travel is expected to grow by 50% of the total by 2020 and remain strong for 15 years thereafter.

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Millennials Are More Consumption Driven

According to  studies, millennials spend 13% more than other generations per airline ticket. This can be understood by the fact that millennials are more consumption driven. The value they place on consumption now, is much higher than savings for later. This explains why millennials are more likely to spend on additional amenities such as wi-fi or upgrades. That said, the generation is more likely to look for discounts. This doesn’t mean that they are interested in packaged deals. They look for customizable/ tailored deals that are targeted specifically at them. This is explained by the generations’ desire to feel “unique.” Two-thirds (66%) of millennials value unique experiences while traveling, compared with 50% of older age groups. They demand personalized treatment from travel companies, and want customized options when traveling internationally and domestically.

Increasing Role Of Smartphones

Millennials are more likely to buy air tickets for flights using their smartphones, rather than at travel agencies. This shows the increasing importance of smartphones in not only the lives of millennials, but in the aviation industry.07128

According to a survey, millennials trust the travel related information they see through mobile. 66% of the millennials, as opposed to 44% of non-millennials, are confident that they can find the same flight information through mobile and desktop. Moreover, 59% of millennials actually buy flight tickets using their smart phones.

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The millennials’ tendency towards using smartphones for almost all their needs can be understood by the fact that the generation came of age after the advent of the internet. This has helped shape their preferences in the favor of technology-enabled products.

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Airlines And What They Need To Do

Given that millennials are going to be the primary driver of air travel — both leisure and business — it becomes imperative for airlines to become technologically enabled to provide them with a seamless experience. Therefore, it is important that the check-in process, flight status updates, the kind of food and entertainment offered on flights, all becomes more tailored to suit the needs of millennials. Moreover, as the presence of millennials on social media is the highest in comparison to any other generation, a fast and problem-free method to resolve conflict is essential. However, it will be critical for providers to avoid alienating other generations in the process.

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Notes:

1) The purpose of these analyses is to help readers focus on a few important things. We hope such lean communication sparks thinking, and encourages readers to comment and ask questions on the comment section, or email content@trefis.com

2) Figures mentioned are approximate values to help our readers remember the key concepts more intuitively. For precise figures, please refer to our complete analysis for JetBlue Corporation

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