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March 2, 2024

The Evolution of Airport Lounges in India: From Elite Retreats to Crowded Hubs

Once perceived as exclusive sanctuaries for elite travelers, airport lounges in India have undergone a significant transformation, now resembling bustling hubs rather than serene retreats. What triggered this shift, and how are airports and credit card companies adapting to the changing landscape?

The allure of airport lounges for passengers lies in the promise of complimentary food, beverages, and a comfortable space to unwind before flights. However, the once-elite privilege has become increasingly accessible to a broader spectrum of travelers, fueled by social media buzz around “free ka khana” (free food) and incentivized credit card promotions.

As India surpasses pre-COVID travel numbers, the surge in passengers, coupled with widespread credit and debit card usage offering lounge access, has led to overcrowded lounges across the country. What was initially designed for business travelers seeking productivity and tranquility has transformed into a bustling space for all, driven by the allure of complimentary amenities and a refuge from budget airline services lacking in-flight meals.

To understand the economics behind the seemingly nominal entry fees, it’s crucial to examine the dynamics between credit card companies, airports, and lounge operators. Card issuers negotiate fees with lounges for each cardholder entry, incentivizing passengers with “free” access. However, lounges stand to profit further if visitors opt for additional purchases during their stay.

With credit card penetration still relatively low in India, offering lounge access serves as a strategy to boost card adoption, with future profits anticipated through interest charges and EMI conversions. However, recent trends indicate a shift in credit card offerings, with operators imposing minimum spending requirements and visit caps, signaling a departure from unlimited lounge access.

This transition poses a dilemma for both travelers and lounge operators. Business travelers, once the primary clientele, now weigh the value proposition of lounge access amidst long queues and restricted visits. Consequently, a growing number of solitary travelers opt for the food court, seeking productivity over indulgence, a demographic that lounges initially targeted.

Moreover, the conflict of interest arises for airports with a stake in lounge management or reliant on non-aero revenues. Balancing lounge occupancy with retail and F&B revenues becomes paramount, as overcrowded lounges can potentially divert passengers from other revenue-generating areas.

In essence, the evolution of airport lounges in India reflects broader shifts in travel behavior, driven by accessibility, consumer preferences, and economic dynamics. While lounges continue to serve as havens for some, they also face challenges in maintaining exclusivity amidst burgeoning demand and evolving business models. As the travel industry adapts to these changes, the future of airport lounges in India remains a dynamic landscape shaped by the intersection of convenience, commerce, and consumer trends.

Rajan Shukla

Rajan Shukla

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