Mint Explainer: Why Dreamfolks shut its airport lounge services in India and what it means for you?

Dreamfolks Services Ltd, once the largest aggregator of airport lounges in India, announced the closure of its domestic lounge access business on Tuesday. While it still offers services beyond lounges in India, these contribute only 7% to the company's revenue.

Following the news, the company’s shares slipped 5% to ₹131.07 on the National Stock Exchange on Wednesday.

Will Dreamfolks' move impact lounge users? What does it mean for the company's business? Mint decodes

Why did Dreamfolks shut down lounge services in India?

Dreamfolks’ biggest clients, banks, who used to rely on the company for airport lounge access, have pulled out of its network. With airport operators becoming lounge aggregators themselves and offering these services directly to banks, competition in the space has intensified. Airport aggregators are companies that partner with various service providers at airports to offer a range of services such as airport lounges.

Major lounge participants such as Encalm, which operates lounges at GMR airports like Delhi, and Adani’s Semolina Kitchens, which runs lounges at Mumbai and Lucknow, had recently removed their lounges from the Dreamfolks platform, Mint reported earlier.

Major banks such as Axis Bank and ICICI Bank had also started moving away from their partnership with Dreamfolks.

What does this mean for customers who were accessing its lounge services?

Travellers with bank cards that were still tied to Dreamfolks for airport lounges in India will no longer be able to access the service. If the bank has a direct partnership with the lounge operators, customers will get access. Until the impacted bank ties up with another lounge service provider, customers are unlikely to access the service, experts said.

How much of Dreamfolks’ India business was dependent on lounges?

Chief business officer Sandeep Sonawane told analysts during the June quarter conference call, that almost 93% of its revenue comes from the lounge business. This means that shutting down the service affects a large portion of its business.

During the last quarter conference call with analysts on 7 August, Dreamfolks had acknowledged that other banks are under pressure to cancel their lounge programs and said it was working with banks to integrate its new service offerings beyond airport lounges.

These services could be pick-up and drop services to the airport in premium cars and visa application services.

What’s next for Dreamfolks?

Dreamfolks chair Liberatha Kallat had stated in the June quarter analyst call that the company intended to grow in Southeast Asia and the Middle East by partnering with key companies and offering more services like golf, railway lounges, wellness packages, coffee outlets and social clubs to meet the needs of travellers and city customers beyond airports.

Dreamfolks said it was also considering some strategic partnerships and acquisitions, the details of which were not made public by management.

The company reported a revenue of ₹1,291.88 crore in FY25, and a profit after tax of ₹65.05 crore.

While the company is looking to expand beyond lounges, replacing over 90% of its revenue and reviving the business will be a tough task, an analyst said on condition of anonymity.