The balance between crowded airport lounges and the incremental revenue realized from selling access reached a tipping point for Delta Air Lines. Effective immediately the carrier no longer sells single visit passes. Annual membership costs will also increase in 2019.
Individual Memberships for access increase by $50 per year to $545 or 54,500 SkyMiles. Executive Memberships (including guest access) increase by $100 to $845 or 84,500 points. Such price increases are relatively common, coming every couple years recently. The carrier also continues to tweak the rules around accessing the clubs with a membership. Changing the guest policy was the big shift in the 2016-2017 changes. In the 2018-2019 members will require a Delta or partner ticket for access and lose access to some partner lounges. All of this aims to decreasing crowding in the lounge. But it is not enough.
Removing the ability to buy in as a one-time guest makes Delta unique among US carriers. It also sits counter to trends globally. Emirates recently introduced a paid lounge access option, seeking that bit of incremental revenue against the sunk cost of operating the facility. Etihad did the same at many of its lounges. Even Delta partner Air France sells access to many of its lounges (including the La Premiere first class lounge) at CDG. Paid lounge access makes the airlines good money. But it also brings problems, especially in the US market.
The US carriers’ lounges were, generally speaking, built decades ago. The footprint they sit in is generally too small for the number of guests, just like the gate hold areas are too small for the larger planes now flying many routes. More passengers than ever fly today and the numbers show no signs of abating. Long term projects in some airports will deliver more or expanded lounges but the current state is overcrowding and Delta is finally taking a stand.
Delta’s move follows on a recent history of halting sales of single use lounge passes when clubs are too crowded. Members of the Priority Pass access program can often find themselves shut out at member lounges as well. Alaska Airlines pulled some of its lounges out of the Priority Pass program as a result of overcrowding. Even getting to use the relatively new restaurant dining benefit can be challenging in some airports as the dining rooms are full along with the lounges. All of which points to the same problem: Too many people at the airport and a desire to escape from that terminal experience.
The terminal is a loud, chaotic area with too many people, not enough seats, too many ads and too many shops selling things most travelers do not want nor need. But it is the only option available. Unless one can escape into the serenity of a lounge. As the lounges lose that advantage of space and quiet the value proposition erodes. Delta made the decision to focus on the higher priced annual memberships over the day pass visitors. It will be interesting to see how that translates into the ancillary revenue numbers versus helping sell the fares that include access.
Then again, the credit card-based memberships are still available, and those are the ancillary revenue generators airlines love. Indeed, even as the single access passes are cut co-brand credit card holders remain able to buy in at the discounted $29/visit rate. Changing the flow of the ancillary revenue can prove spectacularly profitable for the airlines, and the co-brand credit cards sit atop that pile.