Indian Banks Reassess Partnerships with DreamFolks After Lounge Access Disruption
Banks Explore New Partnerships
Prominent Indian banks and card networks, including ICICI Bank and Axis Bank, are reportedly considering ending their collaboration with DreamFolks Services Ltd. They are looking to establish direct relationships with airport lounge operators, according to sources. This shift may prompt additional banks to follow suit.
DreamFolks, known for providing travel and lifestyle services, faced a temporary disruption on September 22, 2024, which impacted lounge access for numerous customers associated with major banks and card networks. Although the issue was resolved the following day, the incident has led banks and card networks to seek alternative solutions.
Impact of the Service Disruption
DreamFolks claims to hold a dominant 90% share of the domestic lounge access market for debit and credit card users in India. However, the service disruption in September 2024 caused significant inconvenience for thousands of travelers, as at least 49 lounges across 34 airports were suddenly closed. This situation prompted Travel Food and Services, which manages airport lounges in Kolkata and Chennai, to threaten legal action against DreamFolks.
Adani, which operates seven airports in India, reported that passengers have been facing challenges accessing lounges due to DreamFolks' unexpected service suspension, which allegedly violated service agreements with the airports.
Further Developments
Notably, major operators like GMR, Adani, and TFS account for approximately 80-85% of the traffic in airport lounges, with DreamFolks acting as a third-party aggregator. In a statement on September 22, 2024, DreamFolks referred to the incident as a "temporary disruption" and assured that all contractual agreements were intact, asserting compliance with their obligations.
The following day, DreamFolks announced that the integration issue at Adani Airports had been resolved, allowing for the seamless acceptance of eligible cards at lounges. They emphasized that all types of cards, including credit, debit, and membership cards, would now be accepted.
As a result of the disruption, some banks, including American Express, have opted to switch to Adani Digital for lounge access at Adani-operated airports. Lounge operators have begun working directly with banks to ensure that passengers experience uninterrupted services.