Chinese millennials may be the most important growing travel segment in the entire world. China is already the most important global travel market in terms of number of trips made and spending. As China’s millennials and Gen Z travelers continue to mature and increase their spending power, they will both further drive outbound tourism growth and set the trends of the Chinese market as a whole in the coming decades. Destinations obviously stand to benefit, but the consumption habits of young Chinese travelers also have important implications for international airlines.
1. It’s where Chinese millennials are going that is proving to be the most substantial driver of change for airlines.
Destinations that most older Chinese tourists wouldn’t consider traveling to are able to attract more adventurous Chinese millennial tourists who are not as put off by the potential language barriers or travel times. Well-established Asian destinations like Japan, Thailand, and Vietnam are of course big draws for young independent Chinese travelers as well.
Lesser-known North American destinations have been big beneficiaries of these travel flows. But farther-flung destinations like Turkey, the Czech Republic, the UAE, and Egypt have also been able to attract a fair number of Chinese millennial travelers. These trends are forcing airlines to reorient their priorities for route expansion. Increasing capacity on well-traveled routes may not be, at least over the long term, as important as ensuring a wider variety of routes for these travelers.
2. Chinese travelers overall, including millennials, are de-emphasizing shopping as a travel activity.
Still, that doesn’t mean that Chinese millennials aren’t valuable when it comes to airport and in-flight retail.
Overall, when Chinese millennials travel by air they gravitate towards making purchases, duty-free or otherwise, at airports or onboard planes more than their international counterparts. An estimated 91 percent of Chinese millennial travelers are likely to make travel purchases compared to 74 percent of global traveling millennials. This is also higher than the figure for Chinese travelers overall at 84 percent.
Chinese millennial travelers are also more willing to utilize “fly and collect” services–buying a product on a plane and then collecting it upon disembarking–than millennials from other markets, with an estimated 86 percent and 44 percent,respectively, likely to take advantage of this service. This means that the coming generations of Chinese travelers will likely continue to value air travel retail opportunities. Airlines, airports, and luxury brands have all taken notice of how important this demographic is right now and will continue to be. Airlines, especially, will need to make sure their in-flight retail options continue to be robust and price competitive.
3. Just because younger Chinese travelers are more willing to make purchases while traveling, doesn’t mean they aren’t price sensitive when it comes to air travel.
Higher-end travel experiences have become less popular with Chinese tourists overall, as well as with Chinese millennials. The aviation market in China is still dominated by China’s big legacy carriers, with little room for premium brands like Hong Kong’s Cathay Pacific to make headway. However, millennials are differing from their parents and grandparents in their willingness to utilize the services of low-cost carriers, like Spring Airlines and Beijing Capital Airlines.
The combination of a robust high-speed rail system and relatively strict restrictions on competition between Chinese airlines (many of which are state-owned) has by extension limited the ability of budget airlines to out-compete legacy airlines on price domestically. However, some airlines have been able to carve a niche for themselves on key international routes. Cheaper international airfares have been a growing trend that Chinese millennials continue to be keen on taking advantage of in the hopes of devoting more of their budgets towards experiences at their destinations.