Crowded airport lounges

I often visit airport lounges, and a common experience is that they are crowded.

It is easy to explain why airport lounges are crowded. The cause is the failure to apply the price mechanism. Any competent student of economics knows that prices are determined to equilibrate supply and demand. When you set the price above the equilibrium price, supply will exceed demand. That is why the minimum wage policy causes unemployment. When you set the price below the equilibrium price, demand will exceed supply. That is why rent control causes a housing shortage.

It is the same with airport lounges. The usual way to access airport lounges is to have a credit card that grants access. For instance, holders of the American Express Platinum card can enter Centurion lounges. Now, holding the credit card incurs an annual fee, a fixed cost. But once you have the right credit card, you can access the lounge for free, so the marginal cost is zero. Demand responds to marginal cost, not fixed (sunk) cost. That is why demand for airport lounges exceeds supply (space).

I often fly through the Atlanta airport, and when I have enough time, I mindlessly visit the Centurion lounge at Terminal E. These days, it is not uncommon to wait 30 minutes, so I usually use the American Express app to get on the waitlist while I am still on the plane train to reduce the wait time. The other day, I saw a customer at the entrance furiously shout, “If we need to wait that much, it’s not worth it anymore,” and left. If American Express decides to charge a small entry fee to the lounge, like $5 or $10, I bet the crowds will quickly disappear. But paying a small entry fee each time is not exactly luxurious. An alternative is to sell lounge memberships separately or limit access to this number of times per year, as Delta Airlines does with its Sky Club lounges.