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The Airport Lounge Arms Race

American Express, other non-airlines get in the club game as airlines get more restrictive

Posted by Scott McCartney, March 5, 2014 2:22 p.m. ET

When you get kicked out of a club, go open your own. That’s what American Express has done. Scott McCartney joins Lunch Break with a look at the emerging lounge war between airlines and independent vendors. Photo: Justin Clemons/The Wall Street Journal

When the bouncer kicks you out of a club, go open your own.

American Express Co. AXP +0.36% is opening its own lounges at airports for its cardholders, one-upping airline clubs with cool furniture, rich wood paneling, a free celebrity-chef food buffet, showers stocked with L’Occitane products and manicures, facials and massages. It’s the kind of oasis that travelers have come to expect in Singapore, Dubai or London, but can now find in Las Vegas and Dallas. New York and San Francisco are slated to open later this year.

Why try to out-fancy fancy airline clubs? Because both United Airlines and American Airlines have cut off access for AmEx Centurion and platinum cardholders.

The perk of lounge access at multiple airlines was a major selling point for premium AmEx cards. The cards start at annual fees of $450 a year but come with $200 in refunds of airline fees a year, plus lounge access and other perks.

But as United and Continental Airlines merged they gave their main credit-card partner, Chase, exclusive access to United clubs. American and US Airways are doing the same, saying adios to AmEx access to the Admirals Club lounges on March 22. That leaves AmEx with Delta Air Lines DAL -0.38% for a U.S. airline club partnership—and a lot of angry customers.

“It is just so annoying that American would say goodbye. They’ve made it my problem,” said Michael Fox, a retired Tucson, Ariz., high-school teacher with a platinum AmEx card. He was so upset he filed a complaint against American with the Arizona attorney general. (The attorney general’s office responded that the American-AmEx issue was a private dispute it couldn’t get involved in.)

An Airport Lounge, Minus the Airline

The spa overlooks gate areas in Terminal D at Dallas-Fort Worth International Airport. Justin Clemons for The Wall Street Journal

An American spokeswomen said the airline wanted one credit-card company to have exclusive access to its clubs, which charge $500 for a single annual membership, with discounts for frequent fliers and renewals. “We know we’re competing for our customers’ loyalty every day,” she said.

Credit cards and airlines are symbiotically linked because travel is such a powerful loyalty reward. When airlines fell on hard times, banks with frequent-flier tie-ins pre-purchased billions of miles to help airlines restructure. But the lure of airline miles has weakened with frustration of limited free-ticket availability. So airlines have added other perks to keep hooking travelers, such as free checked bags, early boarding, premium lounge access, companion tickets and frequent-flier miles that count toward elite-status qualification.

Airport clubs have grown in splendor around the world, but in the U.S. they still are largely just seats and power plugs, pretzels and soft drinks. Travelers complain they are often crowded and typically drab—but still a refuge from chaotic airport terminals.

The Centurion Lounge in Dallas, all 9,500 square feet of it, looks like a typical lounge when you walk in, with corporate art and luggage lockers near the front door. A visit to the club, which opened in November in the airport’s Terminal D, is free to holders of the Centurion card, informally known as the black card, and the platinum card. It costs $50 per visit for other AmEx cardholders, including the plain green corporate card.

It’s the free amenities that set it apart. A small spa offers a menu of clothed 15-minute treatments for body, face and hands. The club has a complimentary buffet stocked all day with food designed by Dean Fearing, a popular local chef from Dallas’s Ritz-Carlton Hotel. There’s a conference room with a camera for Skyping and full-size, first-class showers.

While airlines typically offer some free house beer and wine, the complementary Centurion Lounge bar has a cocktail menu created by award-winning New York mixologist Jim Meehan with local flair. The DFW club offers a Smoky Shandy, for example: Tanqueray No. 10 gin mixed with Shiner Bock beer, grapefruit and smoked salt. The Bittermens Inc. Hellfire Habanero Shrub cocktail hot sauce is optional.

Years back, American Express offices in foreign cities were valued outposts where customers could pick up forwarded mail as well as bookings and travelers checks. With little need for those services now, AmEx says it is trying to move more into airports.

The clubs won’t cover their costs, but the company says it only wants them to be selling points for credit cards. AmEx is targeting airports that have high volumes of traffic among its cardholders. Centurion Lounges at New York’s LaGuardia Airport and San Francisco International will probably open in late summer or early fall, spokeswoman Sravanthi Agrawal said, and more are planned.

DFW Airport helped AmEx set up the Centurion Lounge, even though its largest tenant—American—wasn’t thrilled. At an airport board meeting, American complained that AmEx was getting a lower lease rate per square foot than American, putting it at a “competitive disadvantage.” The airport board approved the AmEx contract.

The Centurion Lounge at Dallas-Fort Worth International Airport features a complementary buffet with a menu designed by Dean Fearing, a chef from the Dallas Ritz-Carlton Hotel. Justin Clemons for The Wall Street Journal

Airport CEO Sean Donohue, familiar with fancy Asian lounges after a stint as an executive of an Australian airline, says the Centurion Lounge ups the ante on customer service and makes the airport more competitive among global gateways.

“Lounges really are an opportunity for airports,” Mr. Donohue said.

DFW is considering building a lounge for first-class passengers of international airlines with just one flight a day to Dallas. Around the world, private companies have opened many airport lounges, and a firm called Priority Pass sells access to hundreds of them.

Stacy Jones-Drummond, who runs a Los Angeles entertainment marketing firm, enjoyed wine and champagne with lunch before a massage during a recent trip through DFW. She had used the Las Vegas Centurion Lounge during the Consumer Electronics Show and was hooked.

“If American Express continues to open Centurion Lounges, I’ll stay,” she said. Though a fan of the yogurt-covered pretzels at Admirals Clubs, she likes the Centurion Lounges better. That said, she’ll probably buy an Admirals Club membership, too, because there are more of them. “I need to be connected,” she said, and lounges offer power outlets and quieter space for conference calls.

Matt Morris of San Antonio recently switched to the AmEx platinum card and, on a recent business trip to Greenville, S.C., booked a long connection at DFW just so he could check out the Centurion Club.

“I wanted to see what the fuss was about,” he said. “This is considerably nicer.”

Still, he said he’ll switch to a Citibank card for the Admirals Club access that comes with it. “It can be a crummy lounge, and it’s still better than being downstairs in the hustle and bustle,” he said.

http://www.wsj.com/articles/SB10001424052702304554004579421173460547170