HDFC Bank, one of the largest private sector banks in India, has announced major changes to the lounge access program for its premium Regalia and Millenia credit cards. These changes will take effect from December 1, 2023 and aim to rationalize complimentary lounge visits which had become very expensive for banks to provide in recent years due to overcrowding.
Regalia First Credit Card Loses Lounge Access
The biggest change is the complete withdrawal of all complimentary lounge access, both domestic and international, on the Regalia First credit card from December 1, 2023.
Previously, the Regalia First card provided the following lounge access:
- 8 complimentary lounge visits per year at domestic lounges in India using the Visa or Mastercard Regalia First credit card
- 3 complimentary lounge visits per year at international lounges outside India using the Priority Pass membership
This lounge access was a major feature and benefit of holding the Regalia First card. However, from December 1, 2023 onwards, Regalia First cardholders will not get any complimentary lounge access either within or outside India.
Regalia Credit Card Gets Quarterly Lounge Access
For the higher-end Regalia credit card, lounge access will now be limited and tied to spending thresholds.
As per the new program:
- You will need to spend Rs. 1 lakh or more in a calendar quarter (Jan-Mar, Apr-Jun, Jul-Sept, Oct-Dec)
- On meeting this quarterly spending milestone, you can have up to 2 complimentary domestic lounge access e-vouchers valid at select lounges in major airports in India.
- These e-vouchers need to be generated each quarter and will carry a QR code to be scanned at the lounge entrance
- Lounge access using the Priority Pass for international lounges outside India will continue to offer 6 complimentary visits per calendar year.
Earlier, the Regalia credit card provided 12 complimentary lounge visits per year at domestic lounges in India. So the new program represents a significant reduction in lounge access privileges. Now cardholders will need to spend Rs. 4 lakhs each year to get up to 8 domestic lounge visits annually.
Millenia Credit Card Also Gets Quarterly Lounge Access
The Millenia credit card from HDFC Bank also offered complimentary quarterly lounge access within India which was temporarily halted from October 1, 2023. This has now been reinstated with an annual spending threshold.
As per the new lounge access policy for Millenia:
- Cardholders need to spend Rs. 1 lakh or more in a calendar quarter to get 1 complimentary domestic lounge visit voucher
- These e-vouchers will be valid at select lounges in major airports in India
Earlier, Millenia provided 2 complimentary domestic lounge visits every quarter with no spending requirements. The new policy expects cardholders to spend Rs. 4 lakhs annually to get 4 lounge visits instead of 8 earlier.
Why Have Banks Reduced Lounge Access?
The rationale behind HDFC Bank cutting down complimentary lounge visits for premium cardholders is primarily to reduce costs. Here are some of the factors at play:
- In recent years, rising incomes have led to an explosion in premium credit card issuance by all major banks. The number of cardholders eligible for free lounge access under various credit card programs has swelled.
- This has led to overcrowding at airport lounges in India which were not designed to handle so many visitors. Lounges have become crowded and chaotic.
- Banks have to pay lounge operators a fee per visitor if cardholder lounge visits exceed a fixed quota agreed upon. With more cardholders visiting lounges, banks are forced to pay millions of rupees in extra lounge access fees every year.
- In some cases, banks have had to pay 4000-5000 rupees per cardholder visit, which is very expensive considering the limited revenue from cardholders who only use the cards for free lounge visits.
- Many “lounge hungry” customers apply for premium cards only for the free lounge access without using the card for any spending. This does not generate any revenue for banks but only increases costs.
- By linking lounge access to spending requirements, banks are hoping to incentivize more card usage. This can potentially increase revenue and offset some of the rising lounge access costs.
Bottomline
Offering unlimited, no-strings-attached free lounge access had become far too expensive for banks. The lounge access reductions, while criticized by customers, are a prudent financial decision to control costs and incentivize premium card usage.
They may cause short-term unhappiness but will ensure long-term sustainability and profitability of premium credit card programs.
