As America’s aging Baby Boomers start to crack open their nest eggs in retirement, there’s speculation that they will use the contents to take flight. In a research note, TD Cowen (TD+0.96%) analysts suggest that older travelers will present the airline industry with “golden opportunities.”
Looking at anecdotes from industry voices and data from Federal Reserve overviews of consumer finances, the bank’s Tom Fitzgerald and Helane Becker believe that older flyers will drive outsized revenue growth because they have a lot of money to spend and don’t mind spending it.
“This generation is setting into its golden years and ready to enjoy the fruits of its labor,” the report says. “They reveal themselves to be relatively price inelastic when it comes to travel. They want to take domestic trips to visit family and friends, and international trips to check off bucket list items.”
The report points to September comments by Delta Air Lines (DAL+0.64%) president Glen Hauenstein about all the older flyers the company is seeing in its tony Delta One airport lounges.
“If you look at the people, who are sitting in the Delta One product right now on the Transatlantic, the average age is probably 50, 55,” he said. “And that’s skewed right? There are people in their 30s and 40s, but there are [also] people in their 60s and 70s. And I think that demand from this retirement is going to carry us really, really well through the next few years here as the baby boomers continue to retire.”
Sifting through Survey of Consumer Finances data from the Federal Reserve, the TD Cowen analysts estimate that Baby Boomers are sitting on about $79.8 trillion in wealth. Yardeni Research estimates that to be about half of all U.S. wealth. Though much of that money will make its way into the hands of younger heirs in the decades to come, they’ll definitely be spending a good bit of it before then.
“While costs are typically reported as the top barrier to travel, just 12% of those aged 70 or over surveyed in 2022 reported that they were planning a budget-conscious trip.”
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