Why Banks Are Reducing Complimentary Lounge Access on Credit Cards

[TechnoFino]

Complimentary lounge access stands as one of the widely promoted features of credit cards. Almost all mid-range and higher-tier credit cards offer free lounge access to their customers, with even some entry-level credit cards featuring this perk.
Due to the extensive advertising, a surge in air travelers, and increased credit card users, banks are grappling to continue offering free lounge access across their entry-level, mid-range, and premium credit cards. Some banks have introduced certain conditions, while others have completely eliminated the lounge access facility from their cards.

So, what costs do banks incur when offering free lounge access?
Before delving into the costs, it's important to understand how free lounge access operates. Refer to my previous article [Free Airport Lounge Access Using Credit Cards: How It Works] on this topic for more insights. Banks and airport lounge companies function independently, lacking direct contact or connection. Instead, intermediary aggregator companies step in. Entities such as PriorityPass, Dreamfolks, and others establish partnerships with airport lounge companies and credit card issuers. These aggregators bridge the gap between banks and airport lounges, extending free access benefits to the banks' credit cardholders.

Banks can provide free airport lounge access through two methods:

• Via Card Network: Employing the "Via Card Network" approach, banks purchase bulk free lounge visits from the card network associated with the credit card. For example, if your credit card network is Visa, the bank would already have a tie-up with Visa for issuing their credit cards. Visa, in turn, collaborates with various airport lounges worldwide. The bank pays a per-visit fee to Visa and grants its customers free airport lounge access.
• Via Aggregator Company: In the "Via Aggregator Company" method, banks directly partner with aggregators like PriorityPass or Dreamfolks. These aggregators connect banks with airport lounges across the globe. Here, the bank pays a per-visit fee to the aggregator company, which then purchases lounge visits in bulk from the actual airport lounge providers. This ultimately offers customers free airport lounge access.

Now, moving to the core point - what are the actual costs of providing free lounge access?
In both scenarios, the bank covers the cost of furnishing free airport lounge access to customers. While cardholders enjoy the benefits of complimentary lounge access, the bank bears the expenses. The per-visit charges vary based on the bank's bargaining power and location. For instance, if you were to access airport lounges in India without a credit card offering this benefit, you might pay anywhere from Rs. 800 to Rs. 2500, depending on the location. However, for banks, this rate is considerably lower than the regular public rate. Banks generally pay between Rs. 200 to 1000 per visit, depending on the location and their negotiation strength.

The Growing Pressure on Banks:
With the continuous rise in air traffic, offering free lounge access has posed a financial challenge for banks. They are spending substantial sums to provide lounge access to customers. Many customers who don't frequently use their credit cards still avail the free lounge benefit, resulting in no income generation for the bank from those customers. As a result, banks are now stipulating specific spending criteria that customers must meet within a designated time frame before enjoying free lounge access. For instance, lifetime free credit cardholders from IDFC First Bank can only avail free airport lounge benefits if they spend Rs. 5000 in the previous month. Major players like ICICI Bank require customers holding premium credit cards such as ICICI Sapphiro and Rubyx to spend Rs. 5000 in the previous quarter to access free lounges in the current quarter. In response to increasing costs, some card issuers have been compelled to eliminate free lounge access benefits from certain credit cards. For example, SBI Card removed lounge access benefits from their SBI cashback credit card to curtail expenses.

The Future of Complimentary Airport Lounge Access:
Today, people are increasingly choosing air travel over railways due to rising railway fares. Rather than booking AC Tier 2 and Tier 1 tickets, one can secure a flight ticket at nearly the same rate. Consequently, air traffic is growing day by day, and airport lounges are becoming overcrowded due to credit card-linked free lounge access. Banks are finding it challenging to continue offering airport lounges for free. As a result, they have begun implementing various conditions. In the near future, we might witness the complete removal of lounge access from entry-level and mid-range credit cards. Moreover, banks may raise the spending criteria for premium cards to grant free access.
I believe that banks should also extend premium treatment to their top-tier super-premium credit cards, such as a dedicated section at the airport lounge or queue-less entry.

 

[abhishek0882]

While I do feel the pain of airport lounge access being removed/reduced/conditions imposed on some of my cards, I feel that if this reduces overcrowding at the lounges, it would be a great relief and will actually enhance the experience of the lounge access and hence the value of this feature on the card. These days I sometimes would prefer sitting peacefully at one of the better airport restaurants or in a quiet corner than going into an overcrowded lounge and jostle for average and mediocre free food. Isn't that ironic?
While banks maybe doing this to save themselves a few bucks, they may actually be unintentionally enhancing the quality of the offering and the customer experience through this.
And there should be some solid reasons to aspire for the premium cards, isn't it?

 

[D₹V]

While I do feel the pain of airport lounge access being removed/reduced/conditions imposed on some of my cards, I feel that if this reduces overcrowding at the lounges, it would be a great relief and will actually enhance the experience of the lounge access and hence the value of this feature on the card. These days I sometimes would prefer sitting peacefully at one of the better airport restaurants or in a quiet corner than going into an overcrowded lounge and jostle for average and mediocre free food. Isn't that ironic?
While banks maybe doing this to save themselves a few bucks, they may actually be unintentionally enhancing the quality of the offering and the customer experience through this.
And there should be some solid reasons to aspire for the premium cards, isn't it?

+1
Agree 💯.

 

[amit]

since we are now at pre pandemic level in terms of air travel, need a proper restructuring on airport lounge for future

 

[SamPtnk]

While I do feel the pain of airport lounge access being removed/reduced/conditions imposed on some of my cards, I feel that if this reduces overcrowding at the lounges, it would be a great relief and will actually enhance the experience of the lounge access and hence the value of this feature on the card. These days I sometimes would prefer sitting peacefully at one of the better airport restaurants or in a quiet corner than going into an overcrowded lounge and jostle for average and mediocre free food. Isn't that ironic?
While banks maybe doing this to save themselves a few bucks, they may actually be unintentionally enhancing the quality of the offering and the customer experience through this.
And there should be some solid reasons to aspire for the premium cards, isn't it?

Agree few years back I used to sit peacefully at lounges with good food . Very few people

Now there are lines outside lounges./overcrowding with food quality down the drain

 

[Andy1]

Following the thread and realising people complaining about lounge's premium feeling is getting lost day by day. Gentlemen , India is growing like anything especially for last 7-8 years per capita income plus awareness of facilities have increased tremendously. Those days are gone when only few people used to invest in share market,purchase a 20 lacs car or travel via Air. Country is growing, keep that in mind bros , in no case now airport lounge is going to be like earlier if you want to sit outside and eat idli or samosha for 500 rs do it no body is stopping you but forget about old days and move on.In future nos are going to increase only.

 

[mr_vasanth]

Are the lounges in the international terminals within India treated as Domestic or International lounge ?
For using the lounges in the international terminals within India we need to use PP or directly swipe the credit card ?

 

[D₹V]

Are the lounges in the international terminals within India treated as Domestic or International lounge ?
For using the lounges in the international terminals within India we need to use PP or directly swipe the credit card ?

It'll be domestic

 

[mr_vasanth]

Ok. So we can directly swipe the card in the international terminals right ?

 

[D₹V]

Ok. So we can directly swipe the card in the international terminals right ?

I never experienced lounge access.

Technically yes.

@VISHESH_BANSAL @4uziaul @shutapdiya @Shubham Yadav might add

 

[shutapdiya]

I never experienced lounge access.

Technically yes.

@VISHESH_BANSAL @4uziaul @shutapdiya @Shubham Yadav might add

Used only once that was also domestic

 

[Deleted member 9785]

 

[balpreet.singh]

As some banks already started minimum spend criteria. HDFC regalia having the steepest criteria on spend. I do believe based on card category, non premium / super premium the spend based critera to be put definitely

 

[OverdosingOnCopium]

The answer is actually simple. Western Civilization as a whole is about to collapse. Almost all civilizations last for 300-400 years. Guess how many years have been since the start of the current western civilization? 223.

We are on the brink of complete collapse. We are the last people to roam this culture. Everything is collapsing around us. Extremely high inflation, stagnation in wages, highest rates of robbery, drug abuse, sex changes, lowest rates of marriage and low birth rates under replacement.

This world is over for us as we know it. Pray to your God's for salvation.

 

[balpreet.singh]

The answer is actually simple. Western Civilization as a whole is about to collapse. Almost all civilizations last for 300-400 years. Guess how many years have been since the start of the current western civilization? 223.

We are on the brink of complete collapse. We are the last people to roam this culture. Everything is collapsing around us. Extremely high inflation, stagnation in wages, highest rates of robbery, drug abuse, sex changes, lowest rates of marriage and low birth rates under replacement.

This world is over for us as we know it. Pray to your God's for salvation.

Then do we go to himalaya for meditation 🧐 or live life as if zindagi na milegi dobaraa 😀

 

[OverdosingOnCopium]

Then do we go to himalaya for meditation 🧐 or live life as if zindagi na milegi dobaraa 😀

It is up to you

 

[Deleted member 9785]

The answer is actually simple. Western Civilization as a whole is about to collapse. Almost all civilizations last for 300-400 years. Guess how many years have been since the start of the current western civilization? 223.

We are on the brink of complete collapse. We are the last people to roam this culture. Everything is collapsing around us. Extremely high inflation, stagnation in wages, highest rates of robbery, drug abuse, sex changes, lowest rates of marriage and low birth rates under replacement.

This world is over for us as we know it. Pray to your God's for salvation.

so depopulation and less children is a good thing.

Population Decline Will Change the World for the Better

A future with fewer people offers increased opportunity and a healthier environment

www.scientificamerican.com

 

[OverdosingOnCopium]

so depopulation and less children is a good thing.

Population Decline Will Change the World for the Better

A future with fewer people offers increased opportunity and a healthier environment

www.scientificamerican.com

Only if it happens at the same rate throughout the world. Unfortunately, first world countries like China, USA, Japan and most of Europe are the ones struggling with low birth rates. 3rd world countries with lesser economies, lower iq's and parents that can't afford to feed their children have an uncontrollably high birth rate. Countries like Africa, India, Pakistan and Afghanistan need to drastically stop producing children.

 

[ALOAK]

Dedollarisation and inflation and American banks are failing . Normally civilization stays 200yrs to 400yrs after that changes. But don't worry bharath will withstand however west and other nations want bharath to fail that is why they give negative narratives attacking particular community etc. Hindu bashing has become common nowadays

 

[Deleted member 9785]

Only if it happens at the same rate throughout the world. Unfortunately, first world countries like China, USA, Japan and most of Europe are the ones struggling with low birth rates. 3rd world countries with lesser economies, lower iq's and parents that can't afford to feed their children have an uncontrollably high birth rate. Countries like Africa, India, Pakistan and Afghanistan need to drastically stop producing children.

india is already at replacement rate