Millennials And Their Increasing Contribution Toward Air Travel
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. 
- What’s Happening With JetBlue Stock?
- Will JetBlue Stock Rebound To Its 2021 Highs of Over $20?
- What’s Next For JetBlue Stock After A Sharp 19% Fall Post Q1 Results?
- Gaining Over 20% This Year, What Lies Ahead For JetBlue Stock Following Q1 Results?
- Should You Pick JetBlue Stock At $6 After Q4 Beat?
- What’s Next For JetBlue Stock After A 35% Fall This Year?
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.
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.
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.
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.
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.
Have more questions about JetBlue Corporation (NYSE:JBLU)? See the links below:
- Higher Expenses Weigh On JetBlue’s Q3’16 Results, Even As Unit Revenues Improve
- JetBlue’s Q3’16 Earnings Preview: Reduction In Capacity Expansion To Arrest The Decline In Unit Revenues
- How Did JetBlue Perform Operationally In September?
- How Has The State Of Air Travel In The U.S. Changed Over The Years?
- How Has JetBlue’s Financial Position Improved Over The Last Few Years?
- Is Renewable Diesel The Way Forward For The U.S. Aviation Industry?
- How Did JetBlue Perform Operationally In August?
- Can Passenger Airlines Revive The Growth In The Air Cargo Industry?
- How Are The U.S. Carriers Taking Advantage Of The Restoration Of Diplomatic Ties Between U.S. And Mexico/Cuba?
- Why Has Trefis Revised Its Price Estimate For JetBlue To $18 Per Share?
- Capacity Growth Fuels JetBlue’s Q2’16 Revenues, Slightly Offset By Declining PRASM
- JetBlue’s Q2’16 Earnings Preview: Capacity Expansion And Mint Services To Drive Results
- What Impact Will Crude Oil Prices Have On JetBlue’s Enterprise Value?
- How Are US Air Fares Correlated To Crude Oil Prices?
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
View Interactive Institutional Research (Powered by Trefis):
Global Large Cap | U.S. Mid & Small Cap | European Large & Mid Cap