The problems for airport lounge service provider DreamFolks Services are far from over. According to a report by ET, eight more banks, including HDFC Bank, could also shift to deal directly with the airport lounges and bypass the company. Two major private banks, ICICI Bank and Axis Bank, have already moved away from the company to directly partner with the airport lounges.
Why are banks shifting from DreamFolks?
The ET report elaborated that the primary reason for this is banks looking to deal directly with the customers and banks and cutting out the middleman. DreamFolks, till last year, was the biggest airport lounge access service provider and had 90 per cent market share till last year.
Adani Airport and GMR Airports, which operate major airports in Mumbai, Delhi, Bengaluru, Ahmedabad, Hyderabad, and more, control 70 per cent of air traffic in India. The two biggest airport operators are gradually cutting ties with DreamFolks.
Travel Food Services (TFS), which operates many lounges at these and other airports, is also beginning to move away from the middle and deal directly with the customers.
According to the ET report, Adani Airports is building in-house software which will give customers direct access to the lounges through Adani’s POS machines. The report says that for the past few days, major banks have also been shifting to the new system. Further, GMR Airports, which is looking to follow a direct access model, could also build similar software infrastructure for its customers.
What has changed for DreamFolks
DreamFolks CEO Liberatha Peter Kallat said these changes have led to a sharp dip in usage. The company used to have traffic of 800,000 people at its lounges every month earlier. It has now fallen to around 400,000-500,000 per month.
While the CEO says that the company is working with the banks on a new customer value proposition, the road ahead remains very challenging as its relations with lounge operators remain strained