Why social and demographic factors influence air travel demand

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Social and demographic factors

Categorizing generations in the U.S. according to the year of birth provides insight into the changing trends in the travel and tourism industry. The demand for air travel has increased significantly over the years. This indicates changing travel preferences among the latest generation. The U.S. population is categorized as follows:

  • Baby boom generation – Born between 1946–1964
  • Generation X – Born between 1965–1979
  • Generation Y or Millennial generation – Born between 1980–1999
  • Generation Z – Born after 2000

Demographic factors also play an important role in forecasting demand. The factors match customer expectations in regard to value-add service offerings. For example, in the U.S. the future of travel and tourism will be defined by the growth in the millennial generation. The millennial generation includes 16–34 year olds. Retiring baby boomers’—people who were born between 1946 and 1964—spending on travel is supposed to decrease.

Travel spending forecast by generation

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According to Boston Consulting Group’s (or BCG) research, the millennial generation is the future of the travel and tourism industry. Currently, the travel industry is driven by baby boomers’ travel needs. In the next five to ten years 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. It’s expected to remain strong for the next 15 years after that.

Currently, the baby boomers are the active customers. Their business travel spending is expected to decline to 16% by 2020. It will decline to 11% by 2025. The high customer satisfaction scores of major U.S. airlines like Delta (DAL), United (UAL), American (AAL), Southwest (LUV), and JetBlue (JBLU) reflect their increased focus on satisfying the changing customer travel preferences in order to remain successful.

In the next part of the series, we’ll discuss how travel preferences differ between the millennial generation versus non-millennials.

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