Why Dreamfolks is shutting domestic airport lounge services in India
What's the story
DreamFolks Services Ltd, formerly India's leading aggregator of airport lounges, has announced the suspension of its domestic lounge access business. The decision comes after major banks and lounge operators have severed their ties with the company. The move has raised questions about its impact on customers and the future of DreamFolks's business model.
Business challenges
Pressure on DreamFolks's business model
DreamFolks' business model has come under pressure as major banks such as Axis Bank and ICICI Bank have started moving away from their partnership with the company. The shift comes as airport operators are becoming lounge aggregators themselves and offering these services directly to banks. This has intensified competition in the space, further straining DreamFolks's operations.
Customer impact
Impact on customers
The suspension of lounge access services by DreamFolks will directly affect travelers with bank cards still tied to the company for airport lounges in India. However, if a bank has a direct partnership with lounge operators, customers may still get access. Until the affected bank ties up with another lounge service provider, customers are unlikely to have access to these services.
Revenue reliance
Major impact on revenue
DreamFolks' chief business officer Sandeep Sonawane had said during a June quarter conference call that nearly 93% of its revenue comes from the lounge business. This means that shutting down this service has a major impact on its overall business. The company had also acknowledged other banks are under pressure to cancel their lounge programs and is working with them to integrate new service offerings beyond airport lounges.
Future strategy
DreamFolks looking to expand in Southeast Asia and Middle East
Despite the challenges, DreamFolks is looking to expand in Southeast Asia and the Middle East by partnering with key companies. The company also reported a revenue of ₹1,291.88 crore in FY25 and a profit after tax of ₹65.05 crore. However, analysts believe replacing over 90% of its revenue will be a tough task for the company as it looks to revive its business beyond lounges.