The old and the beautiful
Millenials will become an important business aviation market, but there is still a lot of money to be made by focussing on older customers. Especially as they are going to be around for a long time.
ROMAN POET Horace, 100 BC: “The beardless youth does not foresee what is useful, squandering his money.” Business Insider, 2018 AD: “Bearded Millennials are causing a crisis in the razor industry.” These two lines show that humans have been analysing and complaining about the next generation for thousands of years. And no generation has been as studied as so-called Millennials (those born between the 1980s and 1995, who became adults at the turn of the century). They may feel unfairly picked on for buying avocado on toast or living at home with their parents. But in a few years, it will be their turn to mock Generation Z (those born after 1995) or whichever generation is branded next. For now, however, the focus is very much on Millennials. There are hundreds of books and thousands of articles about how to sell, manage and live with Millennials. And this makes sense. One-in-three of all American workers is a Millennial and it is a bigger cohort than Baby Boomers (born between 1946 and 1964).
Many industries are already feeling the effects of this new generation of customers. Department stores have blamed Millennials for falling sales. Beer companies say they are suffering because Millennials are more likely to drink wine and spirits or non-alcoholic drinks. Hotel chains are saying that they are losing out to Airbnb. Millennials will definitely reshape business aviation. By 2030 they will be a key group of customers. Many business aviation companies are already trying to reach Millennials – particularly ones launching themselves as the “Uber of Private Aviation.” But it will take time for them to become the most important business aviation market.
Millenials will become an important business aviation market, but there is still a lot of money to be made by focussing on older customers. Especially as they are going to be around for a long time
Despite all the research, there are a lot of arguments about what the traits of a typical Millennial actually are. Data shows that they are more likely to stay living at home with parents for longer, get married later and less likely to buy a car – this is why some have dubbed them the ‘Peter Pan generation’. But after this, characterisations get more woolly. One thing that you can definitely say is that Millennials are the first generation to have grown up with the internet. They are often referred to as “digitally native” because of this. And they clearly embrace technology. “Millennials are definitely open to using lots of communication channels,” says Adam Twidell, CEO of PrivateFly, the online charter broker owned by Directional Aviation. “You cannot force them down one route and need to be there on WhatsApp or Telegram and ready to speak with them when they want to call you.” “Because we launched as a digital platform in 2008 we have always attracted younger customers,” says Twidell. “We have also been led by them which is why we started taking Bitcoin payments in 2013.” He says that the average PrivateFly customer is 40 and that 57% of PrivateFly’s flight bookings start with searches on mobile phones. Twidell says Millennials tend to have a number of key priorities, such as internet access, when chartering. “They definitely want WiFi and often want protein snacks rather than sandwiches. We also find you often need to factor in a few extra minutes on the ground so they can take photos for Instagram.”
The sharing economy is not just for Millennials. Nor is it a new idea: the first aircraft charter dates back to 1910, then fractional in 1986 and now memberships.
The global economy vs the Global Economic Crisis
Another thing that many people tell you about Millennials is that they are no longer interested in owning things. Airbnb, Lyft and Uber are often cited as examples of how Millennials have embraced the sharing economy more than other generations. In 2015 John Zimmer, the co-founder of Lyft, predicted that most Millennials would not own a car by 2020. Many car manufacturers listened and invested in ride sharing companies to protect against this expected shift. But it has not happened. It is easy to forget that many Millennials graduated during the Global Financial Crisis (that older generations caused) or that many started work with large student loans. This is why they did not rush to buy cars or houses.
Academic research from Nicholas Klein at Columbia University and Michael Smart from Rutgers University shows that Millennials who have achieved financial independence actually own more cars that anyone forecasted. “We caution planners to temper their enthusiasm about ‘peak car,’ as this may largely be a manifestation of economic factors that could reverse in coming years,” write the pair. The same is true for houses. In 2015 far fewer Millennials owned houses at the age of 30, than 30-year-old Baby Boomers did in 1975. However, recent research suggests that Millennials are now catching up. The gap in difference between home ownership is closing quickly. It is far too early to say that Millennials will not want to own aircraft or yachts when they have the cash. There are signs that some people do want to share assets – but the sharing economy is not just for Millennials or even a new concept. Business aviation has always had options for people who do not want to own a whole aircraft – first charter (which goes back to 1910), then fractional in 1986 and now memberships. Baby Boomers are also important to the latest platforms. The average age of an Uber customer may be 34.6 for men and 33.1 for women. But older Uber customers typically spend 30% more on each trip and are crucial to the company. In 2016, Airbnb said more than 60% of all users of Airbnb were millennials, by 2018 this had fallen to 58% as older customers discovered the company. Airbnb also has 400,000 hosts who are over 65 years old in the US alone. Younger consumers will lead much of the digital revolution, but Generation X and Baby Boomers will follow them. And for now, Boomers have more money.
The older fleet
Despite the focus on young tech billionaires, data company WealthX estimates that the average age of a billionaire was 65.7 in 2018. Over half of all the world’s billionaires are between 50 and 70 years of age. Corporate Jet Investor calculations show that on average Ultra-High Net Worth business jet owners are in their mid-60s (although the data is patchy). The same is true at NetJets. “Our average customer is in his or her early 60s,” says Patrick Gallagher, president of sales and marketing. “If, in fact, the age of our average customer skews higher than our competition, I view that as a testament to our longevity and our retention rates.” Although tech CEOs like Facebook’s Mark Zuckerberg and WeWork’s Adam Neumann attract the most headlines, the average age of CEOs is also rising. Chicago recruitment firm Crist Kolder says that the average age of a Fortune 500/S&P 500 CEO in 2018 was 57 for men and 56 for women.
There were more CEOs aged 80 and over in their survey than CEOs under 40 years old. This all fits in with the aging US population. The US Census Bureau estimates that by 2030 one-in-five US residents will be older than 65 (this is when all Baby Boomers will have reached 65). In 2035, it estimates that there will be 78 million people aged over 65 compared with 76.7 million under 18. Business aviation is already good at serving older passengers. The ability to drive up to a jet is a huge advantage when set against the distance you need to travel at commercial airports. No one enjoys queuing but it is even more tiring when you are older. But aircraft manufacturers, FBOs and operators can do better. Their existing customers will be around for many years to come, so now is the time to look for ways to improve the experience further. It is still relatively hard to get onto many business jets if you are disabled or infirm and toilets are not always user-friendly
Operators also need to be ready for medical incidents when flying. “Illness does not discriminate by age, but it is a fact that the older you get the more likely you are to have chronic conditions,” says Sarah Magee, commercial aviation director at Phillips. “Anyone flying more than four hours and especially over water should have medical kits, an AED [Automated External Defibrillator] and tele-medicine capabilities allowing them to connect to a medical facility to get help.” Magee says that tele-medicine makes the biggest difference in the first hour of an incident. “The ‘golden hour’ is proven in medicine and getting expert advice early can literally be the difference between life or death in many cases,” says Magee. “You can easily use a large amount of the golden hour diverting to an alternative airport, burning off fuel and landing.”
It doesn't pay to ignore the spending power of the grey dollar.
70 year old Bernard Arnault commissioned the superyacht symphony
Generations are all alike
Studying different generations requires academics to make rough generalisations and come up with arbitrary splits (no one really thinks that one child born in 2005 is really going to have radically different attributes than someone born in similar circumstances in 2006). But many of the traits identified as being Millennial are found across all generations. This includes Millennials wanting experiences and caring about the environment. The term ‘Experience Economy’ dates back to 1998 (when the oldest Millennials were 17). Joseph Pine and James Gilmore – the two academics who wrote the paper argued that this was a natural function of a maturing society and that the experiential economy is huge. Millennials do care deeply about experiences (and often recording them on social media) but so do other generations – as the hundreds of 80year olds visiting the Antarctic on cruise ships each summer proves. Millennials and Generation Zs are also very vocal about environmental concerns. Flygskam, the Swedish word for “flight shame,” is one of the buzzwords of 2019 and much of this campaign has been led by Greta Thunberg, a 16-year-old student. But you just have to watch protests to see younger people are not the only ones worried about the environment. “We get a lot of younger clients asking about the environment and wanting to off-set their flights,” says Twidell. “But the same is increasingly true for older customers. It is a big issue now.” Millennials will be a core group of customers within the next 20 years and all businesses should be targeting the next generation. The good news is that many of the improvements you introduce for the digital natives will also be eagerly adopted by older people (digital tourists). For example, how many people now collect tickets from travel agents before heading to the airport? But while you should be working hard to win bearded hipsters, do not overlook grey-haired customers. Or as Horace said: “Carpe Diem,” or “Seize the day, trusting as little as possible in tomorrow.”