Following a crippling service last year that left thousands of flyers without access to airport lounges, senior Indian banks such as ICICI Bank and Axis Bank, and Mastercard are currently weighing whether to sever business ties with airport lounge aggregator DreamFolks Services Ltd. The financial giants, sources say, are planning to enter into direct partnerships with the lounges themselves, representing a potential shift in the way premium travel services are handled in India.

DreamFolks, a behemoth in India’s airport lounge entry ecosystem, experienced a temporary but severe service outage on September 22, 2024. The disruption impacted entry to 49 lounges at 34 airports, causing chaos for the cardholders who had become accustomed to effortless entry to lounges via the banks’ deals with the aggregator.

Lack of access to basic facilities

While the services were resumed the next day, the incident made stakeholders worried. One senior banking official, who preferred not to be named, said, “It was a wake-up call. When thousands of our high-value customers couldn’t access basic facilities at airports, we had to think again about the entire model.

Since then, ICICI Bank and Axis Bank, including Mastercard, have reportedly begun venturing into other models of service. Direct tie-ups with operators of airport lounges are part of this, eliminating the middleman. Other banks may soon follow suit, say industry watchers.

Axis Bank didn’t comment, but emails sent to ICICI Bank and Mastercard went unanswered. DreamFolks also hasn’t replied to questions.

The disruption was serious enough to prompt Travel Food and Services (TFS), which operates lounges in Kolkata and Chennai, to threaten legal action. Adani Group, which operates lounges in seven airports, even went public with a statement that the disruption was against service contracts of DreamFolks. “Customers all over India have been facing disruptions on account of the sudden stoppage of services by DreamFolks,” the company said in a statement.

DreamFolks functioning

DreamFolks, established in 2013, now boasts of catering to more than 90% of the domestic lounge access business for debit and credit card holders in India. It serves as the link between banks and lounge operators such as Adani, GMR, and TFS, which together manage more than 80% of the airport lounge business in India.

Following the September fiasco, DreamFolks released a statement quoting “a temporary disruption” and ensured that its services were back after integration fixes were made with Adani Airports. However, by then the harm was already done.

In its wake, some players moved swiftly. American Express, for instance, has already transferred lounge access services at Adani-run airports to Adani Digital.

The increasing demand for direct partnerships between banks and lounge operators represents a potential change to the airport services business model. “Banks no longer want to be dependent upon aggregators,” added another source close to the situation. “Customer experience is everything, and any breakdown on that level reflects back on the banks, rather than the service provider.”

DreamFolks, listed in 2022, is attempting to diversify. Although its FY25 revenue increased 14% to ₹1,292 crore, its net profit fell 5% to ₹65 crore. The company has expressed intentions to expand its non-lounge services business, covering spa and wellness, F&B, meet-and-assist, and airport transfers.

But since banks reconsider partnerships, DreamFolks could come under more competition and pressure to reinvent itself.

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