Many travellers use credit cards to access airport lounges at no cost, but the business model behind it remains less known. Suraj Kumar Talreja, a data analyst at Pune’s V Square Systems and former Standard Chartered Bank employee, explains how lounge operators still manage to earn profits despite offering free access.
An airport lounge is a special area where passengers can relax, eat, work, or sleep before their flight. According to a report by The Economic Times, Talreja mentioned that most people in India now enter lounges without paying any money. Travellers can swipe their credit or debit cards to enter lounges without paying directly. While it seems free, the cost is borne by someone behind the scenes.
Talreja explains that the fee is covered by the bank or card network, such as Visa, MasterCard, or American Express. Each time a cardholder accesses a lounge, whether using HDFC, Axis, SBI, ICICI, or Rupay, the lounge operator receives payment from the bank. This arrangement is part of the credit card benefits designed to enhance customer satisfaction and attract new clients.
Lounges provide a wide array of amenities, including buffet food, beverages, Wi-Fi, charging points, newspapers, and comfortable chairs. Some lounges even offer showers, spas, and sleeping areas.
Talreja emphasises that this is no longer a luxury but a business model. Banks pay for the experience, and passengers enjoy it.
Banks have to cover the cost of each lounge visit. In India, the fee ranges from Rs 600 to Rs 1,200 per domestic lounge visit. For international lounges, the cost can be between 25 to 35 dollars (approximately Rs 2,000 to Rs 3,000), facilitated through networks like Priority Pass or LoungeKey. Thus, when a cardholder spends 30 minutes in the lounge enjoying a sandwich and coffee, the bank covers the expense.
There are four ways to access a lounge. The most common method is using credit or debit cards. Other methods include international networks like Priority Pass, LoungeKey or Dreamfolks, purchasing a day pass (Rs 1,500 to Rs 3,000), or holding an airline business class ticket or special status.
Lounge operators profit from the fees paid for each visit, the large number of credit card users, and partnerships with caterers and airports. Although their margins are not high, they earn money from the high volume of visitors. Banks also benefit because free lounge access encourages more card usage and increases the likelihood of customers obtaining a premium card later on.
