Have we reached peak lounge?

A new model for non-aeronautical revenue may be hiding in plain sight

Heathrow Terminal Three arguably offers the greatest collection of airport lounges anywhere in the world. There are at least ten airside, although not all are available to one passenger at once.

Front cabin travellers and shiny card holders in the oneworld alliance can use four – American Airlines, British Airways, Cathay Pacific or Qantas*. The alliance rules have no issue with lounge hopping and passengers can use them all, if they so desire.

Other airline lounges include the Emirates facility and the groovy-funky Virgin Atlantic Clubhouse, recently refurbished and with the airport’s only outside viewing platform.

More airline lounges are available in the arrivals area – American Airlines, an Emirates “limo lounge” where passengers wait for complimentary cars and Virgin Atlantic’s “Revivals”.

Back in departures, there are also an American Express lounge, a personal shopper lounge, a No 1 Lounge and a “Clubrooms from No 1 Lounges”. On an early business trip back in 2006 when I was still in the telecoms industry I remember using the rather good Gulf Air lounge in Terminal Three.

If any airports are close to “peak lounge” today, Heathrow Terminal Three must be one of them.

There are many more examples at many more airports.

But today I want to explore the future. Have we reached “peak lounge”? And what if the entire departures hall became a lounge in all but name? Read on…

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Airport lounges can essentially be classified into four types:

1. Lounges operated by the airport that do not require an additional payment to access, such as the ordinary “departures lounge” open to all passengers – these are mature from the perspective of passenger experience and retail tenant rents, but might have interesting opportunities from an airport seeking to monetise their assets

2. Lounges operated by the airport that can only be accessed on payment – these are emergine in some airports and mature in others

3. Lounges operated by third parties, such as Collinson Group, who operate more than 80 “lounges and airport experiences according to their website – the Amex and No 1 Lounges facilities at Heathrow would fall into this category – operators like Collinson have matured the business model, but some airports have further to go than others

4. Lounges branded by an airline – they need not be operated by the airline, for example Qantas lounges in Melbourne and Sydney are operated by Sofitel Hotels – these are mature, although some monetisation opportunities such as sponsorship may continue to be refined.

5. Special terminals, such as Lufthansa’s First Class terminal at Frankfurt, the old Premium Terminal at Doha and Mancheter Airport’s “Aether” – these are rare and not mature, so where they exist monetisation opportunities could be substantial.

So to answer the “have we reached peak lounge” question completely, we need to consider each of these four categories. But in today’s article we will just be looking at number one – the ordinary “departures lounge”, accessed by all passengers. The monetisation of special terminals will be covered in a future article.

Access to the “departures lounge” is traditionally included with all airline tickets. It has to be, otherwise how would passengers be able to access the gates.

However airports are hungry for revenue. Changes to the departures model might be interesting for them to consider.

Charging for priority security is one example. Heathrow bundles the normally faster channel in with a 1^ST class ticket to the airport on their Heathrow Express rail link to central London.

Car parking is another way that airports monetise their space.

In 2023 the UK’s largest airports (Heathrow, Gatwick, Stansted and Manchester), made £673 million ($915 million) a year from car parking. That is £1.8 million ($2.5 million) on average every day.

Heathrow developed 900 new parking spaces in 2024. These spaces will have contributed to non-aeronautical revenue, which grew from 36.3% of total airport revenue in Q1-23 to 37.2% in Q1-24.

My local terminal at Newcastle Airport charges a hefty £6 ($8.18) just to pick up passengers or drop them off. The fee reduces to £4 if you use a car park slightly further away.

There is no charge to park at the “Waiting Zone” next to Callerton Parkway Metro station, one stop away from the terminal by train. The fare is £2.50 on a pay as you go “Pop” card. Alternatively, a free shuttle bus operates between the Waiting Zone and the terminal.

Could airports apply the pricing logic that they have applied in car parking inside the terminal?

The idea would be that access to the gates, basic seating and loos would have to come free of charge as these are essential elements of an airport’s service.

But restaurants and shops in the airport of the future might be behind a paywall. They might not look and feel any different to the restaurants and shops of today, but would have become to all intents and purposes another lounge.

There are potentially significant downsides to airports of following this model. Retail and hospitality franchise holders might argue that airport charges for access would harm demand for their services. They might demand lower rents as a result.

Airports might also find that passengers tend to arrive at the airport closer to flying time if they know there will be no free access to anything other than basic facilities.

This could put pressure on check in and security areas and force airports to choose between hiring more staff or suffering more delays and putting off their airline customers.

However there might be upsides for airports too, as well as the incremental revenue from new access charges.