With COVID-19 border restrictions now a distant memory in much of the world, even in Asia-Pacific which has largely been a good six months late to the party, international travel is rebounding and airport lounges are big business again.
Whether you’re a frequent flyer escaping the usual crowds in the terminal, a business traveller catching a shower and some uninterrupted Wi-Fi between flights, or a First Class guest enjoying some pampering in a spa before a cocktail (or three) at the martini bar, the ground experience has fast gained almost equal importance with the in-flight offering over the last couple of decades.
You only have to look at the significant investments in recent years by airlines like Cathay Pacific, SIA, United and Qantas to realise the importance airlines recognise their premium passengers and frequent flyers place on this element of the journey.
Here in Singapore we’ve seen a raft of recent openings, which culminated in 2022 with a brand new set of flagship lounges from home carrier Singapore Airlines, at Changi Airport Terminal 3.
Even pre-pandemic, flash new facilities from Qantas, Cathay Pacific and Qatar Airways have graced Changi’s terminals, adding more and more options if you’re flying with the right airline.
When you do get access to these pre-flight pads though, a question we’re often asked is “who foots the bill?”.
Let’s take a look.
Lounge access schemes
If you use a lounge access scheme like Priority Pass to gain entry to an airport lounge, and there are thousands of facilities worldwide accepting these methods, the lounge access scheme pays a fee to the lounge operator each time you visit.
For example if you pay US$299 for an annual Priority Pass including 10 complimentary visits, there’s a margin for the lounge access provider between what you’re effectively paying for each visit (US$29.90) and what Priority Pass pays the lounge operator.
For the unlimited access membership levels, like the one you get with Priority Pass as a perk of your Citi Prestige card in Singapore, the lounge access provider receives fixed fee for the membership itself, either from you or your credit card company, and is then ‘betting’ on you using only a certain number of visits per year (since it still pays the usual rate for each one).
With a few memberships they will definitely lose out here, but most people aren’t accessing an airport lounge on a daily or even weekly basis this way, so the business case works out across the membership group as a whole.
Access based on your travel class
If you’re entitled to use an airport lounge on the basis of your travel class, in other words your ticket entitles you to lounge access, most of the time it’s paid for by the airline you’re flying with.
For example, a Business Class passenger flying on Malaysia Airlines from Singapore to Kuala Lumpur decides to try a couple of the Oneworld lounges. A meal in the Qantas Singapore Business Lounge, followed by a glass of Champagne (yes they do have it, on request) in the British Airways lounge.
Malaysia Airlines will pay Qantas and British Airways respectively for this passenger’s two lounge visits.
Many airlines operate their own lounges, even outside home base, like Singapore Airlines in Sydney, Cathay Pacific in London and Qantas in Singapore.
In these cases the airlines are making a saving by not paying other carriers or lounge operators to accommodate their passengers, though of course they then endure the lease rates and operating costs of having their own facilities and employing lounge staff at an outstation.
For example without its own lounge at London Heathrow T3, Qantas might instead use the British Airways lounge there. By operating its own facility however, it is avoiding paying BA a fee, as its customers will be directed to use the Qantas lounge.
Alternatively a similar saving arises by not having to pay a third-party lounge provider, like Plaza Premium, for the same service.
Of course there is a significant cost associated with operating a branded lounge at an outstation, but airlines also want their own lounges to offer product consistency and meet customer expectations, especially on key business routes.
Where an airline does not offer its own lounge, it usually contracts another airline or third-party provider to accommodate its premium passengers at an agreed discounted rate.
For example Finnair directs its Business Class passengers and eligible status holders to the Marhaba Lounge in Singapore, not because it thinks you’ll get a better experience there, but because it has a contract with the lounge provider at a lower rate than the airline will pay if you use the (superior) Qantas, BA or Qatar alternatives, which you can and definitely should use.
Most passengers (by our estimate, 80%+ of First and Business Class passengers) don’t even know they can access the lounges of an alliance partner at the same departure airport, and therefore they simply use the lounge they are told to use, so this strategy does work for the airline.
The ‘Marketing Carrier’ complication
There are occasions when the airline you’re flying with doesn’t pick up the bill for your lounge access when you’re flying in an eligible cabin, because you are on a codeshare booking.
In these cases the ‘Marketing Carrier’ will pay for your lounge access.
Let’s say you’re flying from Kuala Lumpur to Singapore in Business Class on Malaysia Airlines under a codeshare SQ flight number (e.g. MH611, but you are booked and ticketed on SQ5611, which appears on your boarding pass).
In this example, Singapore Airlines (the ‘Marketing Carrier’) will pay Malaysia Airlines for your use of the Golden Lounge in KL.
Access based on your frequent flyer tier
If you gain access to a lounge through your status level with your frequent flyer programme, for example when flying in Economy or Premium Economy with an airline in the same alliance, your frequent flyer programme pays the lounge operator for access.
For example, if a Singapore Airlines KrisFlyer Elite Gold member (Star Alliance Gold tier) passenger flying Economy Class on Air Canada from London Heathrow to Toronto chooses to visit the United Club at Heathrow’s Terminal 2, KrisFlyer (Singapore Airlines) will pay United Airlines for the visit.
If the passenger then wanders over to the Air Canada Maple Leaf Lounge at Heathrow T2, again KrisFlyer (SIA) will pay for the access, even though the passenger is flying with Air Canada.Note: In oneworld the operating carrier used to pay if you accessed a lounge based on frequent flyer status, not the frequent flyer programme, however we understand this changed several years ago and is now in line with the way it always worked in Star Alliance / SkyTeam (i.e. the frequent flyer programme pays).
When we say “the frequent flyer programme pays”, remember that often an airline’s FFP is segregated financially from the airline itself.
For example Aeroplan (Air Canada) and Qantas Frequent Flyer (Qantas) are separate entities and companies in their own right. Even where an FFP is integrated into the airline, like KrisFlyer, it is almost certainly operated as a different cost centre responsible for its own budget, revenue and expenses.
FFPs are businesses in themselves, and in some cases generate higher profits than the airline does!
Travel class trumps FFP status
If you hold lounge-eligible status with an alliance but you are flying in a lounge-eligible cabin class with a member airline, the travel class takes precedence over your status level when it comes to determining payment for lounge access.
For example a KrisFlyer Gold member flying on United out of London Heathrow in Business Class can visit any of the three Star Alliance lounges there before departure (AC / UA / SQ), and United will foot the bill regardless (yes, even at the SilverKris lounge!).
In the Oneworld alliance, Emerald status holders travelling in Business Class with a oneworld carrier will also have Business Class lounge access paid for by the operating carrier, unless they access a dedicated Oneworld First Class lounge or First Class section, in which case the frequent flyer programme pays for the visit.
For example a Finnair Plus Platinum member (Oneworld Emerald tier) departing from Singapore in Business Class with British Airways visits the Qatar Airways Premium Lounge, then decides to head across to the Qantas First Lounge before departure.
British Airways pays for access to the Qatar lounge, but Finnair Plus picks up the bill for the Qantas First Lounge visit (in Oneworld’s former policy, BA would pay for both visits).
Access rates paid by lounge programmes or airlines are commercially sensitive, so we can’t accurately say how much money is changing hands for these visits in 2022.
Those in the industry who shared some knowledge with us have suggested that when an airline permits Business Class lounge access to a passenger flying on another alliance carrier, a fee of US$40-60 is not far off the mark.
We understand (pre-COVID at least) that United Airlines pays Singapore Airlines around US$60 for each Business Class passenger using the SilverKris lounge at Changi before departure.
That sounds expensive, however do remember it works both ways, with SIA forking out a similar rate to United for use of the Polaris Lounge and United Club for its eligible passengers in San Francisco, for example.
About eight years ago, we know that Cathay Pacific was charging oneworld carriers HKD 450 (~US$60) for each eligible passenger to use its Business Class lounges in Hong Kong (e.g. a British Airways or Qatar Business Class traveller).
The Malaysia Airlines Satellite Golden Lounge at KLIA was charging US$45 for the same thing. First Class lounges can be more expensive than that.
You might never have cared who was paying for your airport lounge access (well, provided it wasn’t you!) but now you know – and it’s not necessarily who you might have thought.
Generally speaking when you’re flying in an eligible travel class, the operating airline of your flight either provides its own lounge, or foots the bill for a third-party facility or any other same-alliance lounge you choose to visit.
When you are accessing a lounge based on your frequent flyer status, it’s the airline you hold the status with that covers the cost for those third-party or alliance lounge visits, unless your travel class entitles you to access that lounge anyway, in which case it’s back to the operating airline (or marketing carrier) to foot the bill.
(Cover Photo: Qantas)