The economics of (oneworld) lounges
 

So, I've always wondered: what are the economics of lounges?

For oneworld at least, anyone with Sapphire status or better can access any oneworld lounge at any airport (though there seem to be some caveats about contract lounges whose corner cases are not totally clear to me -- can you end up in a situation where you have no lounge access because all the lounges are contract lounges and refuse you access, or do the oneworld rules mean at least one lounge must be made available to you, if there are any oneworld lounges at that location?).

My understanding is that at least in oneworld it is the operating carrier that pays the cost of the lounge (including any guests). So doesn't this incentivise an airline that doesn't have many flights to hand out Sapphire status with wild abandon? The corner case is an airline that offers lifetime status, which might end up effectively getting other airlines to pick up the bill, if the passenger is not / no longer resident in the airline's geography. Or does it all average out equitably, with smaller carriers both less likely to earn money from lounges and less likely to have to pay for access to someone else's lounge?

Also, I think I read somewhere that oneworld has two levels of business lounge (I don't mean first and business, I mean within the business category), something like normal and premium, and the latter obviously costs more to the operating carrier. What stops airlines from declaring every lounge they operate as being premium, to maximise income from other carriers? Is there some kind of specification of what constitutes a premium business lounge, and if so what are the determining criteria?

Finally, would I be correct to assume that if I go lounge surfing, i.e. just pop into a bunch of lounges at an airport just to see what they're like and then pick the best one, this is bad for the operating carrier because they get whacked for the entry fee for each? Would I also be correct to assume that if I leave and reenter the same lounge (on the same day) the operating carrier just pays for one entry?

Some answers
- Yes there can be contract lounges that typically are based on class of travel and then status with the operating airline, so you can be out of luck. These are pretty rare.
- Lounge economics is a dark art, but take it as passengers ticketed in the right class for the lounge are charged to the operating carrier. Passengers using status but say in Y where they could not access the lounge are charged back to the airline that provided the status. A good example is the QF F lounge in SYD, where QF has a children enters for free policy, but some airlines such as QR and CX do not so as a OWE travelling on QF your family can enter, but if on QR or CX they cannot as those airlines will not pick up the bill. This is usually through a charge back behind the scenes.
- Sometimes you get odd examples such as CX and BA that in MEL/SYD will use The House lounge rather than the QF J lounge. Arguments are on whether that is due to the QF lounges being poor or whether The House provided a better deal . Nothing to stop you using the QF J lounge.
- Some airlines organise lounge a little differently, QR for example will have a often a Qatar lounge (for J and F), and then a second lounge that is for elite members. Same with AA/BA at JFK there is a business lounge (Greenwhich), OWE (Soho and F pax on non AA/BA) and an F lounge (Chelsea - BA /AA F and GGL/CK only). Same with Qantas domestically will have in major cities a Business lounge for people in business class/OWE and a club lounge for those with status. It allows airlines to match perceived exclusiveness and domestic competition while still providing a lounge for OWS/OWE. The categorisation is simply what sign the airline choses to put on the door. I do not think there is any minimum standards for lounges.
- If you go surfing it is bad for the carrier that gave you the status. And I think that is why some airlines, CX for example give you a lounge pass, in the view that most people will be most likely to go to their preferred lounge.

That s in a nutshell, I expect someone else will be along with more details and examples.

KF

Airlines contracting other lounges when a Oneworld airline has a lounge at that airport does happen. Not that uncommon.
For example at SIN the DNATA lounge is listed for UL flights, the Marhaba Lounge for AY & JL flights and SATS Premier Lounge for MH. At SIN are several OW airline operated lounges.
https://www.oneworld.com/airport-lounges?location=SIN
The OW lounge site does at times list class of travel (left side) vs airline (right side) a little different. The words "Access for eligible customers traveling on any oneworld member airline" are not always present.

An airline will keep its own lounge open for its own flights, but may not be open for the times of other OW airlines.
Its all about the money $$$.

Oneworld only has 1 OW alliance operated lounge. The newly opened lounge at ICN.
https://www.flyertalk.com/forum/onew...ounge-icn.html
OW news release https://www.oneworld.com/news/2024-0...ience-in-seoul

Not sure the QF-F example supports the Y pax lounge is paid by status airline? OW rules is OWE can guest 1, and the operator CX/QR must pay this, but QF will not be paid extra by CX/QR if they let in a second guest. Operator pays. QF children enters free policy is for QF operated flights only, and for pax of any OW status? But not for QF members accessing other OW lounges? Sounds like operator pays?

To OP: one consideration is how much an airline's lounge can profit from pax traveller on another OW airlines. Perhaps this is why BA T5 J/F lounges don't compare well to other OW lounges, only BA/IB (same company) uses T5 so there's no profiteering...
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In my X number of years using the QF F lounges, or the DOM J lounges, never had an issue with QF not allowing my wife and children in as guests of a BA OWE when flying QF, when flying CX, QR etc, they specifically said that CX, QR is one guest only irrespective of age.

It may be murky in the shadows of the rules, but it is pretty consistently applied at SYD and MEL and the dom J lounges and QF clubs. And without any question, argument, discussion, just a smile and in you go.

Maybe I just smile nicely?

KF7034802795

OK, then some more questions:

Lounge surfing is only bad for the FF carrier if you're getting access via status rather than fare, correct? Or does operating carrier only ever pay one entry and the FF carrier pays for any other entries, even if have access via fare?

Do other alliances do it this way, i.e. operating carrier pays if access via fare, FF carrier pays if access via status? Do any alliances make the marketing carrier pay?

Oh, and just for the avoidance of doubt: if I enter a lounge, exit it, then re-enter it (same day, obviously), whoever pays only pays once, correct?

Another consideration is paid lounge memberships, such as AA's Admirals Club.

While I can’t be certain, I’ve read ‘Operating Carrier always Pays, in Oneworld’, many times- on here and other forums.

An old thread:
https://www.flyertalk.com/forum/onew...ho-pays-3.html

djsflynn might have a lot more detail, perhaps?

Maybe to be clearer, my understanding is that the bill from the lounge is charged back to the operating carrier, the operating carrier then reconciles the justification of entry, if it is say business class then they pick up that cost, if it is where the pax is accessing a lounge based on status, e.g. Y pax with status or OWE in J/Y accessing a F lounge, then it charged back to the airline that provided the status. How that is all actually managed and accounted for given all of the IT systems is probably a dark art.

How this is done when the operating carrier, the marketing carrier, the lounge operator and the airline awarding status are all different is a good case study.

Lounge surfing I believe is "costly" for the airlines either operating or status, that said the amount of pax who actively lounge surf is probably a rounding error, of the total users per day.
And i have no problem with lounge surfing but generally avoid it, as I am usually happy with my choice that I researched beforehand, and too lazy to pack up all of my stuff and find a new place...

KF

I like lounge surfing at airports I haven't been to before, unless my prior research has indicated there's a clear winner.

And e.g. at LHR T3 I tend to go to both the QF and CX lounges, since they're both great in different ways (obviously I never go to the BA and AA lounges, which are embarrassing crap in comparison).

Recently I got to visit LHR T2 and was travelling in J so got to lounge surf a bit there (I thought the LH lounge was not as bad as some people insinuated online, and the UA not as great as some people suggested (the AC lounge was closed by the time I got there, and the SQ lounge was closed for renovation)).

With only the simple assumption of 'operator pays'; who pays for the guest - the operator of the status pax's flight or the operator of the guest's flight?
I have a feeling it's the former, as when I guest (MAD,JFK) they don't scan the guest's BP they just briefly take look to see if it's a OW flight.
Or is the guesting even charged at all?

actually, they have opened almost at the same time AMS ones (which some sites like HfP reported as the first OneWorld branded lounge).

OW page: https://www.oneworld.com/airport-lou...ld-lounges/ams

very interesting!does anyone know what the onetime cost is that is charged to airline?(i saw the old thread which said 60$ for emeralds in one lounge but that was 2015)