Spotlight: The Airport Lounge Experience | Ep 74

Hi, welcome to a special edition of a J.D. Power podcast. And today's topic is airport lounges, which is a very hot topic and appears in the news and has a lot of articles written about the issues, the travails and the successes of lounges that are operated outside of the normal gate areas in major airports and minor airports around the United States and the world.

And I'm Michael Taylor. I'm the Senior Managing Director of Travel, Hospitality, Retail and Customer Service at J.D. Power.

And I'm joined by John Cattle, who is our Managing Director of Payments Intelligence at J.D. Power. So welcome, John.

Thank you. Good morning. Hey, tell us a little bit about, you know, because there are two types of basic types of lounge. Well, three, actually.

There is an airline-sponsored lounge, which people see, you know, Delta Sky Club and the Admiral's Club from American Airlines. And then there are the lounges that are independent, like the club and other types of lounges that aren't associated with anything else. And the third type is something that you're very familiar with, which is credit card-sponsored lounges. Give us kind of an overview of credit card lounges and airports.

Sure. So it's an interesting development. So credit card companies, issuers, and banks have really gotten into a more comprehensive set of services around their card products, including things like travel portals, travel lounges, what we're talking about today, as well as many other features. And, you know, the credit card has become more of a sort of an access point to membership perks and benefits than it ever was before.

Yeah. And, you know, from the airport side of things, which is my business, you know, there's something of an arms race going on among airlines and credit cards to create space and expand the space they have at airports. at airports. You know, Amex, you know, the credit card I use most often, I'm a platinum guy with Amex.

Their promise to me is I can access 1,400 lounges around the world. And it struck me as like, are there 1,400 lounges around? There's probably more than that now. But they certainly are building them at a breakneck pace.

And a lot of the airlines that haven't been in the business or have been just kind of dipping a toe into it are really upping the game here and really seriously considering expansion For example Alaska is going to open a 13 square foot lounge at San Diego International Airport in the new building that they just built Sapphire Chase Sapphire has a 21 square foot lounge at Boston Logan And the one I most familiar with, LaGuardia International's Delta has a 35,000 square foot lounge.

So these are not very small, minor things to do. These are major undertakings that the credit cards and the airlines have taken on. JetBlue is going to get it in this game. They're currently under construction with two of them.

I believe the first one's going to open at Boston Logan as well. Southwest Airlines, an airline that never really went in for perks or things that are really above and beyond great service in the cabin itself in an aircraft, they're considering building a lounge at B&A, which is Nashville, Tennessee. Anyway, John, what do the credit card people tell you about the value of these lounges? How do they look at that?

What are they trying to accomplish by having a lounge at an airport? Because it doesn't seem like they're natural turf. No, I think it is a more recent development. And we've seen with the products, particularly the high-end travel cards, high annual fee cards, that this is a benefit that is most used by consumers who have those types of card products.

And increasingly, we're seeing more real estate, as you've indicated, allotted to those sorts of lounges. And they seem to be more popular and more visited by a broader spectrum of cardholders and even non-cardholders alike, whether part of their frequent flyer program or or what have you. So it's something that's really taken root. Yeah.

And, you know, I think the biggest problem that I think everybody sees in lounges is certainly is the topic of most of the media that I read in the past year or so about lounges is just getting into them. You know, they've become the victim of their own success as Ed Bastian, who's the CEO of Delta has said. And I know that I have waited in line and I do really pick really early morning flights, partly because I want to be able to get into the lounge before, where the line starts forming.

And that starts about 7, 10 in the morning at LaGuardia. So, you know, I'm leaving my house at three in the morning just to get into the lounge. Anyway, they're a victim of their own success, just exactly as Mr. Bashan has said.

And, you know, I wonder what the impact of you know having to wait because people are paying these as you pointed out high fees on their credit cards I certainly know that I do for my Amex Platinum I somewhat happy with it I was happier with it before they started limiting my access to the Delta lounges. I think I'm allowed 10 or 12 visits a year. I think I'm up to six now or something. They'll tell me when I get there.

But, you know, in my head, I have a little countdown clock and I'm going to be doing a lot of travel here in the last quarter. and thinking, wow, I'm going to run out of access to these lounges. Anyway, what do credit card issuers feel is the main goal here? What do they want to achieve with these lounges?

Because it's not exactly their main business. What is it they're looking for? Well, it comes down to the bottom line. I think they're trying to not only create an experience that resonates with a broad spectrum of travel consumers, but also that helps to retain customers within the wallet for these credit card products and other types of relationships that they have with the consumer.

And so, you know, sort of making the relationship more sticky ultimately is what they're trying to achieve. Yeah. And I believe the airlines are doing the same kind of thing, just creating loyalty, especially with the people who are paying a higher ticket price. And some of the studies that we've done previously with various airports in the United States, J.

D. Power has found that about a third of the people that in a lounge are there because of their credit card perks. and that's really sort of what's causing this overage you know one third is quite a big big number about half 40 some odd percent say they're getting in there because of the type of ticket they bought you know being an upper class cabin or first class or business class ticket and that's how they're getting in there but you know you put these two things together and suddenly you're running out of space you know that 35,000 square feet lounge at LaGuardia has a capacity of 700 people.

And, you know, and that's not a lot. You know, I think I worked that out to be like 50 square foot per person. I granted a lot of it's kitchen space, you know, but still that's a lot of space in an airport to accommodate these people. And I can tell you that based on the people I've talked to on the airport side of things and in the airline side of things, there's a premium price per square foot being asked for these lounges.

So they're not a small investment at all. And I'm sure there's some calculus there about what is the payback to doing these things because not only are they buying space from the airport itself there an awful lot of services food services liquor wine beer beverages Starbucks available, at least in the Delta lounges that I go to. So they didn't go to that. Yeah, all those things are cheap.

So anyway, they've all made a big investment in this. It seems to be extraordinarily popular. And just as a kind of way of putting a bow on this. You know, John and I are collaborating on a benchmark study at J.

D. Power on lounges, which will come out in this December, December 2025. And, you know, we'll be looking at things about, you know, what makes people go to lounges? What do they value in lounges?

How do they feel about the food and beverage? How they feel about access, the restriction of access, the ambience, the Wi-Fi service, the cleanliness, the amenities, the quiet space to do work or to read, what are important to these people and who does it the best. And anyway, I want to probably thank John for being a great partner on this and contributing greatly to the questionnaire. And I think it'll be very interesting data to both credit card issuers and airlines and other operators when we did publish a study.

John, is there anything that you would like to end this with, this podcast with? Yeah, I think it's important to note that for several years, we've been tracking this benefit in our credit card satisfaction study, both in the U.S. and in Canada.

And it has value. So the overall satisfaction of a credit card in 2025 for those who've used a travel lounge benefit versus those who have not is 72 points higher on a thousand point scale. So that's a pretty big deal. This does have clear satisfaction value with the credit card as well as with the travel experience.

I mean, personally, I think depending on the airport, sometimes the terminal can be quieter than the lounge. But it really, it's situational and I think a lot of consumers are finding value there. I think you're right. Now, I'm really excited to see what these data present and who does it the best.

So anyway, thanks, John, for joining us. And I'm Michael Taylor for the J.D. Power Travel Practice.

And thanks very much for listening to this podcast.