Analysis: Why Indian Banks are brutally cutting down airport lounge access?

In an aspirational and upwardly mobile India, where many people are flying for the first time, everyone looks forward to a perk called airport lounge access before their flight. There are many reasons for the dreadful queues you see at airport lounges, big or small, across the country. I believe they are all correlated to the propensity of Indian travellers to be value seekers at their core.

Airport Lounge Access is a superhit feature that gets tongues wagging because:

  • Over 80% of Indian domestic air travel is on no-frill carriers as per September 2023 numbers, which means about 91 Million people flew through September 2023 without a meal service or in-flight entertainment attached to their tickets. Since airlines only have limited meal options, and it is an Indian thing to look out for hot food, many people throng the lounges before their flights. Besides, many Indians find meals on flights a pricy deal, and with their debit or credit cards, they get food for free before their flights.
  • Not just that, food is an excellent form of entertainment over shopping.
  • Airport food is expensive compared to the same food served outside the airport. Yet again, lounges serve meals for a price next to free (INR 2 on Visa and Amex cards, and INR 25 (Refundable) on MasterCard).

In essence, what has happened over the years has been that those who do not travel so much are excited about accessing an airport lounge and checking out what it is all about, while airports have systemically eliminated the lounges where they did not get a share of revenue, such as the Vistara Lounge and Lufthansa Lounge at Delhi Airport.

How Many people access Airport Lounges in India with their Bank privileges? About a million (10 lakhs) a month

While there is no clear answer to this, Dreamfolks, which claims to be India’s largest airport services intermediary, has some clues. As per Dreamfolks, 2.73 Million people used lounges via their intermediary services in the July – September 2023 quarter, and 2.63 Million people used lounges via their setup in April – June 2023. That makes a total of 5.36 Million people accessing the lounges using credit cards, which sit on the Dreamfolks platform in six months.

Since Dreamfolks claims to have about 90% of the market share in this market, and Priority Pass/Collinson has the remaining 10%, that means about 6 million people use their credit/debit card privileges to access airport lounges in India during April – September 2023. And this does not even include numbers for lounge access via the airlines themselves, who will ask you to access a lounge because you are flying business class or are a Platinum member.

Oh, and to add context for you, Dreamfolks thinks that, at the moment, not more than 40% of credit card holders in India are offered lounge access in the first place.

Costs to the Bank shot up 60% for every lounge trip you make!

The root cause of why you are seeing an increasing number of Banks cut back on complimentary Lounge Access is the cost that has gone through the roof over the past year and the associated commotion at airports as well. India has about 400,000 square feet of airport lounge space in 58 lounges across India.

Lounge Access has been a critical pull for all sorts of credit cards over the years, and banks have actively marketed this benefit. Not one trip at the airport in the past year and a half has gone without an executive of a Bank trying to sell me a credit card so that I could go to the lounge (pointing me in the direction), even when I was heading there anyway.

Now, I’m not the kind of fellow who casts judgment on who should or shouldn’t be in a Lounge because, at the end of the day, we are all using a free perk offered by a Bank or an airline. However, I actively seek out airlines or lounges that are closed to a limited set of users so that I don’t have to wait to get in, for instance, lounge access via status over lounge access via credit cards.

a group of people standing in a line

When banks started indiscriminately rolling out lounge access as candy to sell more cards, they were coming out of COVID-19 and needed a hero feature to bring in users, who were also coming out of COVID-19 and spending on cards had shaken up. But an essential element of their predictions went wrong along the way, which has meant course correction now.

As per Dreamfolks, about two years ago, they were billing their clients (the Banks) INR 600 per visit to the lounge on a blended basis (some lounges may cost less and some more, but the average cost per trip billed by Dreamfolks was INR 600). As of Q2FY24 (July – September 2023), this price per trip has shot up to INR 990, and just a quarter ago (April – June 2023), this price was INR 950. So, as you can note, the fees that the Bank pays every time you swipe your card at the lounge went up 60% in 24 months. 

As per some people in the Banking industry, the costs for lounge access shot up from 0.10% to 0.25% of the product cost, necessitating this change.

Banks are not done curtailing lounge access YET!

HDFC Bank is just the latest actor to curtail lounge access or put new conditions around accessing lounges with their cards. Earlier this year, ICICI Bank, Axis Bank, American Express and IDFC Bank were other banks that moved to rein in lounge access this year, providing it on entry-level cards and mid-tier cards only against a minimum spend clause now. Others, such as SBI Cards, cut up lounge access altogether from some entry-level cards in 2023.

But this is the start of a phenomenon and not the end of it. On a recent investor call, the CEO of Dreamfolks, Liberatha Kallat, spoke about the structural changes in the cards industry. Per her, what used to be a blanket card benefit for customers is slowly being changed to a spend-based structure by such banks.

The broader change put forth by the banks will be visible beginning November-December, she said, which means more is coming. She refused to take names, stating that NDAs with the banks prevented them from talking about the banks that have put in motion such changes to their lounge offerings.


Lounge Access as free candy will no longer be the case. Will it lead to the upmarketisation of the lounge proposition at airports that dropped the quality of their meals to profit from the crowds who did not care about the quality but just looked for a “free” meal at the airport? Or will it lead to more cancellations of cards because people no longer will retain them? Only time will tell. The message is clear: all banks are not yet restructuring their lounge access offerings, and more is coming.

What do you think will eventually happen to lounge access with credit cards? Will it stay in its current form or go away altogether?

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About Ajay

Ajay Awtaney is the Founder and Editor of Live From A Lounge (LFAL), a pioneering digital platform renowned for publishing news and views about aviation, hotels, passenger experience, loyalty programs, travel trends and frequent travel tips for the Global Indian. He is considered the Indian authority on business travel, luxury travel, frequent flyer miles, loyalty credit cards and travel for Indians around the globe. Ajay is a frequent contributor and commentator on the media as well, including ET Now, BBC, CNBC TV18, NDTV, Conde Nast Traveller and many other outlets.

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  1. Banks shamelessly charge 40% interest p.a. basis and interest is compounded daily for default in payment. We credit card holders pay the money on time and take privilege of accessing the lounge. Anytime I would prefer free food / beverages rather than paying 400 plus for just single cup of coffee. We, paying the bills on time are the privileged ones. Do not forget that.

    • If you are paying bills on time, then why are you bothered about the interest rate!
      When you pay bills on time, MDR is all that banks get which at an average of 2% of spending will hardly cover capital and operating costs. So, those who DON’T pay bills on time are actually the privileged ones since they bring in the real money for banks!
      On that note, the share of dues rolled over has been shrinking since the pandemic, which means the profitability of the cards business has been coming down. On top of this, if they have to shell out 1k per lounge visit without any spending requirements, it is a serious loss-making proposition. Hence, the curtailing of this benefit was always a matter of time.

  2. Besides this, this is a mess created by the Bank. Besides putting a spending condition, they must put an annual fee on Lounge access debit/credit cards.

    As a priority pass user, long lines are a big turn-off. Thankfully, Plaza Premium at Delhi T-3 International departure had a separate line for the priority pass users.

    Recently, Encalm took over Plaza Premium. Do they still follow separate queues for Priority pass users?

  3. Lounges across indian metros should be renamed as airport canteens….the quality of food is a joke for a so called privileged entry….while the ambience and sitting in certain lounges are up to the mark…the chatter around with folks gorging on free food and children running around is not really a place for senior execs or select few to find a quiet corner before a flight!! Guess the next move would be to create more exclusivity within such enclosures but only for certain card holders….and over time when the crowd disperses due to conditions laid by credit cards for the Aam Aadmi carrying lowend cards…it would be catch 22 for these lounges. While a hike in entry fee is understandable, the food cost outside lounge in common areas have to go down!!

  4. These are rich people problems. I can count on my fingers of one hand how many times I have flown domestic and international in the last 6 years.

  5. Interstate article Ajay,
    If lounges are grossing close to a Grand per pax, it’s no wonder Adani and GVK have shut airline lounges and are running their own show,

    I completely agree with your point that rather hold on to that Card or airline Status which gives that slightly more exclusive access

    Any hints on the upcoming changes

    • @ the 1K is a blended rate and includes the margin for Dreamfolks, so I assume some lounges get paid more, and some get paid less. Adani was not the one who started this. GVK (erstwhile of Mumbai Airport fame) launched the first airport-operated lounges in India, and after the success of that model, other airports have also started copying them.

  6. Lounge access based on credit card spend is a good move from banks. They may also look for cost sharing of lounge access through a lounge access fee? Even If such a fee is in couple of hundreds also, it is still economical compared to the exorbitant prices of food in airport food courts..The quality of food in lounge also is coming though..

  7. There was a time when as a star alliance gold status member I had complimentary lounge access to exclusive lounges. The food and service were 5 star. Now the lounges are like railway waiting rooms with charity kitchens attached. I prefer now to go to paid exclusive lounges where ever I can find one. Else, wait on a comfortable chair close to my boarding gate.

  8. Lounges were always meant to be places where one could rest effectively without noise and privacy..

    They were supposed to have been exclusive benefit but unfortunately banks over the last 2-3 years in an attempt to gain volumes and competing against each other ended up diluting this vital aspect of privacy and made this a common feature instead..

    And this resulted in the long queues and lack of seating availability that we see at lounges across airports today

    Lounges today are no more a quiet place where one can rest..

    They have become glorified food courts in the name of having a “lounge” which was a huge downgrade over what was there before..

    This move, by the banks to make the eligibility for the lounges more spend based to control their costs was bound to happen sooner than later..

    Hoping that this leads to lesser crowds and the staff able to upgrade some other aspects of the lounge like how you mentioned now there would be lesser people..

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