The free airport lounge access with credit cards is set to get tougher

• Providing free lounge access at airports is costly for banks as they typically pay fees to airport lounge networks.
  
• Credit card rewards are being rationalised with a view to improve margins and counter inflation.
  
• Offering exclusive lounge access to high spenders can significantly boost the perceived value of premium credit cards.
  

All good things come to an end, so the saying goes. Going forward, you may not be able to have free access to airport lounges through your credit card as easily as present times.

Credit cards come with a lot of rewards or benefits and that is something one definitely considers before choosing a credit card. One of the most popular rewards that premium credit cards offer is free lounge access at airports. Premium credit cards often come with a joining fee and have other added features.

According to a 2022 report by Collinsons, a travel insurance firm, 87% of Indians expect airport lounge access as a benefit from a premium credit card.

The number of times free access is allowed varies depending on the card and the joining fees, but for those who travel frequently, this makes sense. Such lounge access can be a good thing, when one has long layovers, plus there are food and beverages thrown in.

However, free lounge access may soon be a thing of the past. You may be required to spend a certain amount on your credit card to avail the benefit. Also, accessing it might be slightly more tedious.

Very recently HDFC Regalia credit cards made some changes to its lounge access program. Now, Regalia credit cardholders will need to spend a minimum of ₹1 lakh or more in a single quarter to qualify for lounge benefits.

The process for availing these perks has also been modified. Once the spending threshold specified by the lender is met, cardholders must visit the Regalia SmartBuy page and the lounge benefits section on the bank's website. There you can generate a lounge access voucher which can then be redeemed.

Changing times for free lounge access with premium credit cards

Banks periodically relook their rewards programme and tweak them in response to ongoing challenges as well as to make it more relevant to users.

“Given the high-interest rate and high demand, credit card rewards are being rationalised with a view to improve margins and counter inflation. At the same time, banks are differentiating their offerings to stay relevant and adjusting benefits to align with their target customer base,” says Adhil Shetty, CEO, BankBazaar, a financial services marketplace.

With the growing number of players in the premium credit card sector, banks may find it necessary to distinguish their services to remain in tune with customer preferences.

This could entail adapting the benefits to cater to their intended clientele. In the immediate future, customers might witness alterations in the rewards linked to these cards, which could, temporarily, result in reduced offerings.

In the near term, customers may see the associated rewards change and even reduce for a time. “But over time, when the economic sentiment changes, many of these rewards will either come back or be replaced by others. This is a cyclic process, and we’ll see the cycle change in a few quarters,” says Shetty.

For now, we may see more banks giving you free lounge access only if you cross a minimum spending threshold.

Why free lounge access may be restricted to high-spending customers

Banks or credit card companies often choose to limit access to airport lounges and reserve it for high-spending customers for various reasons.

Providing free lounge access is costly for banks as they typically pay fees to airport lounge networks. By restricting this benefit to individuals who meet specific spending criteria, they can effectively manage costs and allocate resources more efficiently.

Offering exclusive lounge access to high spenders can significantly boost the perceived value of premium credit cards. This incentivises customers to use these cards more frequently and retain their memberships, ultimately contributing to the card issuer's revenue.

Additionally, practical considerations come into play, as airport lounges have limited capacity. Granting access to all cardholders, regardless of their spending habits, can lead to overcrowded lounges, compromising the quality of the experience.

By prioritising high spenders, banks can help ensure a more comfortable and enjoyable lounge environment for all users.