Delta is Increasing the Price of Lounge Passes – More than You Think, and Not for the Reason They Say

Delta is putting some real investment into its lounges, which is great to see. I still think the American Express Centurion lounges are far better (especially the food) but so does everyone else and they can be crowded at times.


American Express Centurion Lounge Miami

Still, Delta is doing more than American and United currently in the space. For instance, their new San Francisco lounge has a celebrity chef (many of the dishes are charged, rather than complimentary) and looks gorgeous.


Delta Skyclub San Francisco

As Delta has invested in lounges, they’ve also raised price. They raised the full membership fee to $695 a year and started charging a $29 fee to those with more basic membership and who obtain their lounge access via a credit card (American Express Platinum or Centurion, Delta Reserve). Put another way, they’re reducing overcrowding by keeping out your spouse.

Lounge Day Passes are an Anomaly

On the one hand if you want to reduce overcrowding, you shouldn’t sell day passes at all. American Express does not sell passes for the small Centurion Studio in Seattle to its members that do not have a Platinum or Centurion card.

On the other hand, they’re a source of revenue. But if they’re a source of revenue, airlines would likely charge less rather than more for them.

Many airlines sell lounge access at a discount through programs like Priority Pass (or Lounge Club).

Airlines have learned that if they price domestic premium cabins at a modest increment over economy, people buy the seats and they make more money (and upgrades become harder to come by). Charging 4 or 6 times the price of coach for a first class seat wasn’t revenue maximizing back when only about 10% of domestic first class seats were paid for. By reducing the price they do a better job monetizing the product.

An average day or single visit pass from a US airline will cost $50. At that price, very few people buy them. Most lounges are a (somewhat) quieter place to sit and work with free wifi separate from what’s offered in the terminal and usually cleaner bathrooms as well — plus frequently assistance with reservations in the event of irregular operations.

Complimentary booze is usually of the rail variety, with decent food and drink charged at a premium if available at all.

I’ve always thought airlines would make more at $25 than $50, but that would mean more people in the lounges.

Delta is Increasing the Price of their Lounge Passes

Via One Mile at a Time, Delta now charges $59 for a lounge pass.

Lucky reports the price has gone from $50 to $59. If they were trying to reduce crowding by making it seem more expensive, they’d likely have gone to $60. You choose a final digit of ‘9’ when you want something to seem less (the price feels more like $50 than $60). The idea of the 9 is presumably not to scare customers away from buying the pass and entering the lounge.

Delta used to sell passes super cheap. For instance, a pack of 4 for $99. They also used to sell passes on Groupon including a 5 use pass for $89.

Delta has tried the inexpensive route and since they’re trying to make it seem like they haven’t raised pricing much they must be trying to maximize revenue — they must believe enough people buy will buy at $59 that they’ll make more money than they would pricing passes at $25.

Where Delta really imposes a cut though is in how useful the passes are. They have made passes all single visit. There are no more ‘day passes’ which would allow you to use more than one club in a single day. No more visiting a club in your departure city and in the hub where you connect with a single pass.

And when you compare pricing of single visit passes the change is far more dramatic. Laptop Travel explains,

Delta has begun the policy of selling and issuing single visit passes, meaning they’re only valid at one lounge for one entry. So, a purchaser may not visit another SkyClub in another airport, or even the same airport for that matter in the same day. One pass, One lounge. The Day Pass, as most knew it, has been eliminated and replaced by the SkyClub Single Visit Pass. The single pass most recently cost $29, increased late last year from $25. Now access will cost $59.

US Airlines Didn’t Used to Charge for Lounge Access at All

It’s an historical anomaly that US lounges charge for access at all. In general airlines around the world (outside Australia/New Zealand) do not charge for access. It’s provided free to premium cabin and elite customers.

In the US, airlines charge even elite frequent flyers traveling domestically for access. From the time American opened the first airport lounge up through 1974 they didn’t. However the federal government ordered – on anti-discrimination grounds – that airlines either make clubs available to everyone, make clubs available to everyone flying a particular class of service, or make clubs available to everyone who pays.

Paid memberships were a way of ensuring compliance with non-discrimination rules coming out of the civil rights era. Anyone who could pay – regardless of race – could access the lounges.

Once the airlines had a revenue stream associated with the lounges it became difficult to walk away from that. The lounge network starts looking like a separate business unit, with its own profit and loss calculation.

International Airlines Offer So Much More

The private cabanas of Cathay Pacific’s The Wing lounge in Hong Kong are gorgeous.

The architecture of the Qantas first class lounge in Sydney is impressive.

The dining, by celebrity chef Neil Perry, is fantastic as well.

And though complimentary spa treatments are only 20 minutes there, they’re out of this world good.

I can access both of these lounges as an American Airlines Executive Platinum. The top tier elites of these airlines can use their first class lounges as well, regardless of class of service flown.

Now, I absolutely love the agents at American’s club in Austin. And the airline has improved its lounge food offerings.

Yet somehow it seems strange to pay hundreds of dollars for this compared to what is bundled with status elsewhere in the world.


American Airlines Admirals Club Austin

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community Milepoint.com, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

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Comments

  1. Lounge access in Australia/NZ is free for premium class passengers and has always been like that. Not to be confused with Qantas Club which is a separate program and is available to anyone who pays. Qantas Club lounges are separated to Business Lounges

  2. There isn’t “inflation everywhere” only anecdotal cases here and there, such as this article. I’m happy the Federal Reserve acts on facts and not “feelings.” It’s become such a rarity.

  3. When did they start charging $29 for those who obtain their lounge access via a credit card like Amex Platinum? I use my Amex Platinum to access Delta lounges at least twice a month and was never charged anything to access it. They charge for guests but not for the primary cardholder.

  4. There is inflation everywhere. Rents, taxes, Healthcare, assets.

    The only two inflations missing are wage inflation an cost of money (aka interest rates). The first due to globalization and the second due to the cartel of central banks.

    The federal Reserve says they cannot do all the heavy lifting and the Congress should step in. No one asked them to do anything. They shouldn’t have been doing monetarily what should have been done fiscally. Even after putting so much monetary stimulus the economy goes back into recession, the federal governors should be taken out in a public square and flogged. Only an economist can get away with being so wrong and not face repercussions.

  5. Credit, spot on. Andrew, do you work for the govt? There is absolutely inflation with necessities. Food (have you been to a grocery store lately?), Housing (sky-rocketing rents and house prices) and Hospitilization (now mandatory….thank you Obama care). Tell the medicare recepients, who are getting 0 SS cola this year & are seeing their plan B Medicare premiums go up by 50%, that there’s no inflation. But hey, I guess if you don’t eat food, don’t need a place to live and don’t need major Med coverage, you’re right.

    The only place there is absolutely no inflation is in average wage growth. It’s been stagnant for 20 years.

    And right in this post of Gary’s, here’s an example of Delta raising fees more than 19%. But again I guess that doesn’t count as inflation.

  6. Not much inflation in my world. Bought a RT to London in business this week for $1400. Earlier this month I bought six new Amazon Fire tablets for $250 total. Gas is so cheap in the US that one of my English friends likes to waste it by spraying it around. Food costs have been stable here. I can’t even use up my Health Care Flexible Spending Account without getting creative, so even with a new baby this year my health care has been cheap. The US dollar has been crushing other global currencies, so my buying power overseas continues to increase.

    The reason for no increase in Social Security, Military, and Government pensions in 2016 is that the consumer price index has shown a slight drop in 2015. That corresponds with both my financial records and my anecdotal evidence. Sorry about those that are negatively impacted – one size certainly does not fit all in cost of living, but in aggregate living costs are flat.

    Recession talk is silly in the US, although certainly impacting other world economies. The last US recession ended in June, 2009. If you haven’t recovered from that yet, you aren’t working hard enough. It’s a global economy now – only slackers think 40 hours/ week is full time work anymore. As they say, 60 is the new 40.

  7. I’m sure that if you did the math, giving unlimited lounge access to elites travelling soley US domestic, regardless of class of travel would be (to put it mildly) financially unviable.
    Especially when you consider that , for example, AA Admirals Club and Flgaship Lounges can at times be like Grand Central Station at rush hour.
    If you want US lounges to be on a par with those elsewhere you’ll have to expect to pay (more), be it in one off lounge access fees or an increase in air fares.
    Already airlines are starting to un-bundle lounge access within Europe for certain business class fares.

  8. Glad to see they are taking steps to “take back” the lounge. If you are flying on a first or business class ticket, if you have purchased an annual lounge membership or if you have certain high end credit cards, you can still enjoy the lounge. It was starting to seem like a greyhound bus station.

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