By Linus Benjamin Bauer, Managing Director at Bauer Aviation Advisory
As I got back to work after a two-week holiday earlier this year, I added a few thoughts and keywords to my suitcase: Generation Alpha, Millennial Parents, Customer Centricity, and Customer Experience. Readers of this post might start raising their eyebrows and ask why I pay attention to the Generation Alpha already. Some people might tend to agree with narrow-minded quotes like “No point to focus on Generation Alpha now, because we aren’t getting any money from them.”
Let me unpack my suitcase first.
According to various existing research studies (e.g., BCG and Expedia Group), Generation Alpha, those born from 2010 onwards, will be the wealthiest, longest-living, most formally educated and digital fluency generation – set to reach two billion consumers by 2025. Winning over Millennial and Gen Z consumers may be the sweet spot for airlines and airports these days; however, the younger generation is on the rise holding increasing sway over purchase decisions of flight tickets and other bookings (e.g., hotels and travel activities). With globalisation and growing middle class as few of the growth drivers in mind, it happens sooner rather than later.
Prior to the pandemic, travellers with kids from the Gen Alpha have taken an average of more than three family trips per year (Expedia Group, 2019), and almost one of those trips per year is a bleisure trip (combination of business and leisure). In particular, the millennial generation has changed the so-called bleisure concept. And the current pandemic with all the remote work activities will push this concept to another level. Families headed by millennial parents are taking an ever larger share of the family travel market. To win them over, the aviation industry needs to know what sets them apart from their generational peers.
For me and my wife as millennial parents of an interracial Gen Alpha child (9 years, Eurasian), the planning of a trip has become a collaborative activity for the entire family and travel ideas/inspirations come from both my daughter and us (Yes, it is more fun!). Throughout the entire pandemic, choosing a kid-friendly, convenient, and safe airline (and airport) has been increasingly important to us as family travellers than just finding the lowest price.
Because comfort, convenience, safety and family needs are the primary rationales for airline selection on (long-haul) flights during these times. And yes, it doesn’t only apply to family travellers these days. The booking figures from 2021 don’t lie (e.g., increasing share of family travellers in premium classes).
The customer experience at most airlines lags that of top digital-native companies in industries such as retail, where it tends to be far more streamlined and personalised than in our industry (aviation). Airlines’ interactions with customers are traditionally focused on booking reference numbers that contain essential data about an individual flight but little information about the person flying.
Based on my previous experiences, just a handful of airlines across the globe have stood out of the crowd to date – in terms of customer centricity and personalisation. Due to the nature of my job, I’m unfortunately not going to reveal the name of the few airlines here.
Furthermore, the fundamental truth every business has to cope with nowadays is the following: People rather want to buy experiences, not only products or services. Airlines and airports must now deliver great experiences to win in an increasingly competitive world, competing for the minds and hearts of their customers and exceeding their growing expectations at every touch point across the customer journey (e.g., combination of soft and hard products and consistency in service quality).
In the future, airlines need to build a single, coordinated view of the customer across all internal and external systems and touch points. Enabling all technological advancements and capabilities, we should expect a step-change in the degree of customer centricity and personalisation offered by airlines and airports over the next eight years towards 2030. The Gen Alpha is likely to be even more desiring of customised travel plans and travel experiences than the previous generations (Millennials and Gen Z).
By developing new customer loyalty strategies, airlines and airports must win their favour now to foster lifelong relationships with their customers from generations including Gen Alpha. They are getting to live in a fully developed state where the technologies that run our lives these days such as the internet and instant access to worldwide communication networks for any information.
Keeping an eye out for these kinds of current and future trends in air travel – as well as building and laying the foundation for individually customised and personalised experiences – can be a great way to help get ahead of this air travel trend. This is because it is highly likely that the Gen Alpha will want to travel faster, deeper and farther than any previous generations. They also want to feel connected to certain brands.
Finally, along with other generations, the Gen Alpha also holds the key for the post-crisis recovery of aviation in the medium- and long-term while the VFR (visiting friends and relatives), bleisure and leisure segments drive the recovery in the short- and medium-term. Therefore, we should also slowly start focusing on the families with Generation Alpha kids.
Experience beats expense.