More Lounge Access Restrictions

Earlier this month, Capital One informed its Venture X cardholders of upcoming changes that will go into effect in February 2026. Starting next year, only primary Venture X cardholders have complimentary access to Capital One lounges and Landing, as well as Priority Pass lounges. Authorized users and guests will have to pay an extra fee either for every visit or every year. If an account has more than $75,000 in spending in a calendar year, all users associated to the account will have complimentary lounge access for the qualifying calendar year and the following year.

The latest policy changes by Capital One are just the latest example of a trend. Here is what others did:

Brands	Changes
Delta Airlines	– Lounge access is restricted to only 3 hours before flights – No lounge access for economy fares – No access for holders of Delta Platinum Credit Cards, whose annual fee is $350. Previously unlimited – Capped visits for holders of Delta Reserve and The Platinum Card From American Express. Previously unlimited – If you spend more than $75,000 in a year on a Delta Reserve or Platinum Card, you’ll get unlimited access – Access can be bought for a fee or with a Delta Sky Club Membership
United Airlines	– United Club individual membership price increases from $650 to $750 a year. It no longer allows guest access to United Club lounges nor does it allow access to partner lounges. – All-access membership costs $1,450 a year. It allows up to 2 guests at United Club locations and unlimited access to partner lounges – United Club Card comes with an Individual membership plus guest privilege and now costs $695 a year, up from $525 previously
American Express	– Priority Pass access is now capped at 20 visits per year for primary cardholders and 10 for supplementary cardholders – Delta Sky Club access is limited to 10 visits per year for Platinum cardholders

There are two reasons why we see more restrictions on lounge access. The first is that it costs more and more to acquire new customers. The competition at this top end market is fierce. Every brand and issuer wants the top-of-wallet position and the lion share of customer spending. As they throw richer bonus offers and benefits at customers, something has to give to make the P&L work.

The second reason is to create a sense of exclusivity and elite customer experience. Airport lounges can’t expand forever. There is only a certain amount of space for too many lounges. When supply is limited, brands and issuers have to control demand so that it doesn’t outweigh supply too much. If everyone can access lounge, nobody will get a sense that they belong to an elite group; which is one of the reasons why they pay a hefty annual fee. And since nobody wants to turn away new cardholders, the only sensible solution is to make customers pay more or have less access for the same fee.

In spite of the new developments and high annual fees, I do think this premium market will still do well. People pay hundreds of dollars, if not thousands, to buy luxury bags and watches. I think it will be the same for this market. What I don’t know is how many will have more than one premium card at a given time. There will be a handful travel fanatics, for whom it’s worth to have multiple cards. But what about those who are not willing to pay a couple of thousands dollars a year just to maintain card status? Or those who don’t want to be beholden to a specific airline every single time and have to compromise their travel plan because of that affinity?

Citizens Portfolio Revamp

Citizens Financial Group announced a new suite of Mastercard credit cards:

• Citizens Amp: no annual fee for customers with no credit history. Opportunity for credit line increases and product upgrades after 6 months of positive credit behavior
• Citizens Spring: no annual fee with low APR and 0% for 18 months on Balance Transfer
• Citizens Summit: no annual fee with 0% for 12 months on Balance Transfer, 3% cash back on dining & groceries and 1.5% on everything else
• Citizens SummitReserve: $295 annual fee with 3% cash back on dining, groceries & entertainment, 1.5% back on everything else, over $500 in premium travel benefits. $200 fee waiver ($95 Annual Fee) for customers that maintain a Citizens Quest® Checking Account relationship. Full $295 fee waiver ($0 Annual Fee) for customers that maintain a Citizens Private Client(R) Checking account relationship.

Citizens hit the nail on the head with the new products. Each tends to a different need of consumers and all together can help the bank find the sweet spot between risk and profitability. This kind of portfolio compositions is also seen at other issuers:

	No credit	Balance Transfer Centric	Daily use	Travel /Dining Focused	Middle Market	Premium Market
Chase	Freedom Rise	Slate Edge	Freedom Unlimited	Freedom Flex	Sapphire Preferred	Sapphire Reserve
Capital One	Platinum/Secured Discover Student		QuickSilver	Savor	Venture	Venture X
US Bank	Secured	US Bank Shield	US Bank Smartly	US Bank Altitude	US Bank Shopper Cash
Wells Fargo		Reflect	Active Cash	Autograph	Autograph Journey
Bank of America	Secured	BankAmericard	Unlimited Cash	Travel Rewards	Premium Rewards	Premium Reward Elite
Citizens	Citizens Amp	Citizens Spring	Citizen Summit	Citizen Summit		Citizen SummitReserve
Citi		Diamond Preferred	Double Cash		Strata Premier

As you can see, all issuers are now converging on features. As products become similar, issuers need to do a better job at marketing and finding unique value propositions. Capital One has a viral marketing campaign and is willing to invest in marketing and branding. Chase and BofA are pouring millions of dollars into more branches across the country. I once heard that Chase recruited staff 5-6 months prior to a branch opening to make sure they were trained properly. For other issuers, how will they stand out from the crowd?

Chase Sapphire Reserve Makeover

Last week, Chase announced sweeping changes to its Chase Sapphire Reserve. The annual fee increased by 45% from $550 to $795 for primary cardholders. The fee for authorized users will rise from $75 to $195. The bank said that total benefits for cardholers would amount to $2,700 a year, way higher than the annual fee, but most benefits are restricted to the Chase network of travel services like Chase Travel or The Edit.

Like other brands and issuers, Chase makes lounge access more exclusive by raising the entrance fee. Chase Sapphire Preferred cardholders cannot enter the Sapphire Lounges. Even Priority Pass holders only have complimentary visit per calendar year. It’s a logical choice to retain the exclusivity and premium experience for lounge users.

Chase also provides cardholders with more flexibility in booking travel. Yes, it’s required to use Chase Travel, but cardholders can now book with whatever airlines or hotel operators they want.

On the other hand, Chase has only a few lounges and most other benefits from Chase Sapphire Reserve seem to be centered around the high end hotels and restaurants; which limits choices.

I work in the card industry so it’s my job to learn as much as possible about the industry. As a consumer, I am curious to see what issuers and brands will do to compete in such a competitive market. I want to learn more about how they make the economics work. It’s fascinating, isn’t it?