Summary
- Airport lounges are increasingly popular due to their attractive features, including free food, a relaxed ambiance, and a place to recharge amid terminal chaos.
- Airport lounges have become profitable assets for airlines and credit card companies, driving millions in annual revenue through loyalty programs.
- New players entering the airport lounge industry, including credit card companies, offer solutions for passengers seeking lounge access with various rewards.
Being inside an airport is not an enjoyable experience for most. Between the stresses of attempting to find one’s gate after checking in, navigating through security, and managing the bustle of a busy terminal, it is certainly not relaxing. But there is one place within airports that people increasingly want to be: airport lounges.
The airport lounge offers a refuge amid the bustle and chaos of a busy terminal. It offers free food, a relaxed ambiance, and endless places to relax and recharge. These facilities are places where vacations truly begin or where business travelers relax after a busy week away from home.
Photo: American Express
Today, airport lounges are more packed than ever, and some carriers have had to completely overhaul their lounge access systems for frequent flyers due to an increasingly unpleasant experience. For the first time, partially aided by the COVID-19 pandemic, passengers overwhelmingly demand access to premium lounges, even if they are not high-spending vacationers or frequent business travelers.
With such an increase in demand, the market for aircraft lounges has changed, and new players have begun to make their mark on what was once a market dominated by just a few players. In this feature, we will examine how attractive airline lounges are for passengers and why that has increasingly made them more profitable assets for more companies.
Shifting consumer sentiment
Throughout the past few years, consumer sentiment within the commercial aviation industry has gradually shifted towards an increasing demand for lounge access. Travelers once accepted the chaos of the gate area as a necessary part of the travel experience, one that was annoying yet unavoidable.
Photo: JJava Designs | Shutterstock
However, these facilities are becoming increasingly crowded, with more passengers than ever holding the most premium credit cards and sitting on elite status that took years to earn. As a result, airport lounges, which were once reserved for an elite few, have become an essential stop for millions of travelers annually, according to an analysis from CNBC.
This has caused a boatload of headaches for elite credit card companies and airlines, which have attempted to market their lounges as an elite luxury. Some, such as Delta Air Lines, have attempted to heavily restrict access, often ending in catastrophic fashion.
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Money makers
Contrary to what one might believe, lounges are extremely profitable for airlines. Not through one-time fees or additional fees on business class tickets but through the interest that these facilities drive in loyalty programs or high-end credit cards. These lounges are essential pieces of a system that drives millions in annual revenue for airlines and major credit card companies.
Photo: Delta Air Lines
As a result, airlines find themselves in a bit of a trap. It is in their interest for more and more passengers to pursue the levels of elite status needed to gain lounge access and pay the high annual fees on their most premium credit cards. Conversely, the more passengers that attain access privileges to these lounges, the less appealing they become.
Unless that is, carriers make massive investments to increase their lounges’ capacity and elevate the premium experience further. This is exactly what all major US airlines, including Delta, American, and United, have done in order to keep passengers happy. As soon as passengers have to wait to get into the Delta Sky Club or the United Club, fewer and fewer will be incentivized to renew their $600 annual fee credit card.
New entrants
With so many passengers looking to access airport lounges, it is unsurprisingly that more and more players have attempted to enter the space. Traditionally, airport lounges were limited to just a few airline-operated facilities and some private-owned ones. Today, however, almost every major credit card company operates airport lounges, and more and more are getting into the business.
American Express is likely the best-known of these operators. According to USA Today, it opened its first flagship Centurion Lounge in 2013 at Las Vegas’ Harry Reid International Airport (LAS). Now with dozens of executive lounges in operation across the globe, access to this system has become a key selling point for those spending $695 on the American Express Platinum card’s annual fee.
Photo: EQRoy | Shutterstock
Chase now offers a series of premium lounges accessible to holders of its premium Sapphire credit cards, including a new facility that opened at LaGuardia Airport (LGA) this past January. Even Capital One has begun offering lounges, opening three locations in Denver (DEN), Dallas (DFW), and Washington, DC (IAD), with more on the way.
Passengers are increasingly likely to tolerate high annual fees if guaranteed lounge access is included in a credit card’s rewards scheme. Furthermore, third-party credit cards offer rewards systems that can be used to redeem points for travel on many different airlines, as opposed to airline-cobranded credit cards, which typically only offer you the opportunity to earn miles with one frequent flier program.
The airlines’ response
Airlines have attempted to restore an aura of exclusivity to their lounge spaces, with varying degrees of success. Time and time again, carriers have found that stripping passengers of lounge access will likely not prove a passenger-pleaser.
As a result, airlines have not only responded to new competitive pressures within the lounge space by expanding capacity but have also decided to create an entirely new kind of lounge altogether. Flagship premium lounges, which are only accessible to those traveling in long-haul premium cabins, offer passengers a unique aura of exclusivity.
Photo: United Airlines
United Airlines offers the best example of this kind of lounge system with its Polaris lounges. Only a handful of these facilities exist, and there is only one way to get in: flying on an international long-haul business class flight with United or a partner airline. Credit cards and elite status will do you no good when it comes to getting into these lounges.
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The carrier’s most exclusive lounges have a lot to offer.
These facilities offer far more than what was ever available at standard airline lounges, including shower suites and other spa-like amenities. They also offer first-in-class sit-down dining experiences on par with any upscale restaurant and a full-service bar. Most importantly, these lounges are not packed and allow the carrier’s highest-spending travelers their crucial moments of peace and quiet away from the traveling masses.