want to get in on it. You build in an airport.

It's very pricey.

They're spending millions of dollars to attract customers and keep them spending.

Customers reward companies that take care of them, and we feel really strongly that the lounges are a big

part of that for us. If you pay up and you're willing to commit to that airline over the long term and make

it like a partner basically for your travel experience, and they're willing to reward you with with

better perks. More than half of frequent travelers surveyed visit a lounge at some point during their

journeys. But as their popularity increases, so do the challenges of operating them, like

overcrowding. After scavenging the grounds, I finally found a table.

Once again, it is Hunger Games, true Hunger Games to get into a lounge and actually find a seat.

I would say any wait is too long and we are doing everything we can to minimize that.

As companies invest more money and effort into improving travel, loyalty status and lounge access are

becoming increasingly harder to qualify for a.

There are over 3200 airport lounges worldwide.

The United States has more than 300 of them, with individual airports in New York, Los Angeles and San

Francisco home to the most locations.

And there's a lot of ways you can qualify to get into them.

First and business class tickets will typically come with lounge access for most international travel, but

airlines like American, United and Delta restrict lounge entry for most domestic flights.

Many major airlines also have branded credit cards that allow you to earn frequent flier miles from everyday

purchases to use toward free flights.

You get to earn elite status when you reach certain spending thresholds.

Status at an airline comes with a host of benefits like free seat upgrades, free checked bags, premium

customer service, and, of course, lounge access.

Modern lounges often include amenities like an open bar, unlimited food, spa, gym, and even local art

installations. Boston specifically, we have a tap room, right?

Which really kind of leans into the Boston Beer culture, but with a sapphire twist.

Chase Capital One and American Express also have their own lines of premium travel credit cards that are not

airline specific.

These cards earn points and miles that can then be transferred to a number of different airlines.

Chase and Capital One are both in the early stages of creating a lounge network of their own.

Capital one launched its first in 2021, in Dallas, and Chase opened its first US lounge in Boston in May of

2023. Chase has announced the creation of five more lounges continues to be the number one

reason why a lot of our customers get and keep the card, so it was a natural extension for us to move

into creating our own proprietary lounge network.

Lounge investment and lower annual fees are keeping these cards competitive in the travel space to rival

the American Express Platinum, which offers access to its signature Centurion Lounge system.

And while these premium travel credit cards aren't cheap, they offer travel credit kickbacks of up to

$300. The first Centurion Lounge was created in Las Vegas in 2013, and since then

American Express has added over 20 locations worldwide.

The company currently operates 13 of them in the United States, with more on the way.

20% of overall foot volume on airlines are business travel or high frequency travelers and whatnot, and the

other 80% are people that travel maybe only once a year.

And so you don't necessarily have a loyalty to an airline at that point, but you may have loyalty to a

credit card. Premium tickets for those in business class are becoming more readily available, and

customers appear more willing to pay for the additional space.

For example, from 2009 to 2019, the share of premium Delta tickets sold rose

dramatically. United expects to increase its number of premium seats by 75% by

2026. Overall, the average airline ticket price has also steadily decreased over the past 25

years. Adjusting for inflation, domestic flights averaged over $575 in

1995. Today, the average trip costs $382.

Historically, the difference between first class and economy was some eye popping number.

Today, it's much more reasonable and it's, you know, the minute you try it, the more likely you're going to

try it again in the future.

As lounges become more accessible, overcrowding can become a problem.

We added 900 seats last year.

We are adding 2700 seats this year, so that is every action we're

taking. That's what we're taking it for so that our customers won't have to wait.

Delta told CNBC that it is not considering a reservation system for access to its lounges.

Reservation is a complicated system at the end, because you're arriving from a flight or

you taking a Uber from the city 15 20 minutes late.

Do I hold your seat?

Do I give it away? It works in in the restaurant scene when you have a table assigned to you, this is a little

bit more complicated.

American Express allows its Centurion Lounge guests to check in via a mobile app, but access is still not

guaranteed. Capital one is currently experimenting with a digital waitlist system.

We are testing in our app now, and I would think of the digital waitlist less like a reservation

and more like the ability to kind of join a list ahead of time so that your place in line is secured and less

of a guaranteed table.

In 1940, American Airlines introduced the first lounge for customers at the New York Municipal Terminal, now

LaGuardia airport.

There were no membership dues, but you had to be invited.

The clubs became so coveted that in 1967, American Airlines opened its doors to anyone that would pay its

annual dues of $25.

Lifetime memberships went for $250.

That would be equivalent to just over $2,000, accounting for inflation in 2023.

The 1960s saw the expansion of airport lounges across carriers.

The Trans World Airlines sunk in lounge still exists today in the TWA hotel, with themed cocktails and

decor from the decade.

American Airlines AAdvantage program was launched in 1981 and just like its first private lounge, membership

started out by invitation only for the airline's most frequent travelers.

United and Delta both launched loyalty programs that same year.

Loyalty. Grams arose after the Airline Deregulation Act of 1978 and removed government controls

over industry prices.

The intent was to allow market forces to determine the prices going forward.

The rise of loyalty programs fueled the transformation of airlines, going from upscale waiting areas to

immersive luxury experiences by the 1980s.

As we've seen, kind of the volume of guests who are interested in having access to a lounge, as that's

grown, we've worked to continue to add new locations and expand the locations.

We have to make sure that we can accommodate those guests.

As more people traveled, lounges became more in demand and more accessible.

In 2002, almost 613 million passengers flew out of US airports.

In 2022, that number was more than 850 million.

Lounge experiences in the past have typically been designed more around business travelers,

and today people are traveling very differently than they did, you know, 10, 15 years ago.

They're traveling more with family and friends and in groups and, you know, blending business and leisure

travel, airlines and credit card companies spend millions to secure space in an airport.

But these lounges aren't making them much money, at least not directly.

It's not a money maker for us.

It's about offering that experience for people who pay a premium to fly on Delta.

We don't look at them as a profit center.

We need to ensure that they serve the purpose, why we built them, which is, you

know, really making the lounge a reason to fly the airline.

That's our main goal.

Delta, for example, they're expecting to get their Amex contribution up to about $10 billion over the long

term. So that's a big number right now.

Loyalty in general is about call it 10 to 15% of overall revenue for a larger airline and for

premium travel credit cards like Chase, American Express and Capital One.

The main goal is new customers.

Airport lounges in general are the number one reason why someone would sign up for the credit card.

The pandemic created a $35 billion loss for US airlines.

Pent up travel demand has since led to people flocking back.

People's pent up demand to get out and see the world and willing to invest in premium

products. And thankfully, the airline was one of the products that people are willing to invest.

The trend toward Premiumization started before the pandemic and has since taken off.

Overall, economy seats from a configuration standpoint really haven't grown in ten years or so, maybe even 20.

So it's been a long time since the economy section has grown.

But really the the growth in overall seats has really been more on the premium side.

But this travel surge may be cooling off, according to some analysts.

American has partnered loyalty programs with British Airways for three of their lounges at JFK International

Airport, the first time that we have partnered with them to this degree in really

from the beginning, designing and creating these joint lounges.

And so the three joint premium lounges here at JFK are truly just cabin or status

based entry. It's not a credit card or a membership that gets you in.

This relationship dates back to 1982, when American Airlines and British Airways first partnered their

loyalty programs, laying the foundation for modern day airline alliances.

Please do not get mad at the messenger, but we have some annoying news for Delta's most frequent

fliers. On September 13th, 2023, Delta announced changes to its SkyMiles program, causing

customer backlash.

They don't care how much you fly.

They just care how much money you spend.

A month later, the company said it would be walking back some of the more stringent changes.

However, Delta SkyMiles Reserve and American Express Platinum card holders, who currently enjoy unlimited

skyclub access will still need to spend at least $75,000 for the same privilege beginning in

2025. Unless you hold an annual membership, which costs $695 starting as early as

2024. Those flying basic economy with Delta will not be able to access its lounges.

Delta joins American and United, who have also raised their spending requirements to achieve status.

This is a copycat industry in general.

So if someone has the new shiny object, there's going to be a one up at at some point.

That goes for labor.

That goes for pricing, that goes for product, that goes for basically everything.