Introduction
Airport lounges have long been a cherished perk for travelers in India, offering a quiet escape from the hustle of terminals with free meals, WiFi, and comfortable seating. For years, DreamFolks Services made this possible for millions through partnerships with banks and credit card companies. But in mid-September 2025, the company stunned the industry by halting its domestic lounge operations. This move has left investors reeling, cardholders scrambling, and questions swirling about the future of airport perks. Let’s dive into what happened, why it matters, and where things might go from here.
The Rise of DreamFolks: From Startup to Market Leader
DreamFolks Services started in 2013 as a tech platform that bridged the gap between banks, credit card issuers, and airport service providers. The company specializes in aggregating access to lounges, food outlets, baggage handling, and other amenities at airports. By connecting these dots, DreamFolks allowed cardholders to swipe their way into premium experiences without hassle.
At its height, DreamFolks controlled nearly 90 percent of India’s domestic airport lounge market. This dominance came from strong ties with major lounge operators and banks. For instance, partnerships with entities like Encalm Hospitality, Adani Digital, and Semolina Kitchens ensured widespread coverage. Banks such as Axis Bank, ICICI Bank, and HDFC Bank relied on DreamFolks to deliver lounge access as a key benefit for their premium cardholders. This model not only boosted customer loyalty for banks but also drove steady revenue for DreamFolks, with lounges accounting for about 93 percent of its income in the fiscal year ending 2025, totaling around 1,292 crore rupees and a profit of 65 crore rupees.
The company’s success story seemed solid, built on the growing demand for travel perks in a booming aviation sector. Yet, beneath the surface, shifts in the industry were brewing that would challenge this position.
The Turning Point: Key Partners Pull Out
Trouble began escalating in the months leading up to September 2025. Several lounge operators started terminating their contracts with DreamFolks. In August, Adani Digital, Semolina Kitchens, and Encalm Hospitality announced they would end certain services. Semolina’s exit was set for September 15, while Encalm’s followed on November 1. Travel Food Services soon joined the list, further shrinking DreamFolks’ network.
Banks also began distancing themselves. Axis Bank and ICICI Bank scaled back their programs in July, phasing out domestic lounge ties. Reports suggest that up to eight more banks, including HDFC Bank, might follow suit by dealing directly with airport operators. This shift stems from a broader trend where airport giants like Adani Airports and GMR Airports, which handle about 70 percent of India’s air traffic, are building their own software for direct lounge access. These operators aim to eliminate middlemen like DreamFolks, using point-of-sale machines and custom systems to connect directly with banks and customers.
DreamFolks’ leadership acknowledged the pressure. In an earnings call, Chairperson Liberatha Kallat noted that private airport operators were evolving into aggregators themselves, pressuring clients to opt out of existing deals. Usage at lounges dropped sharply, from 800,000 visitors per month to around 400,000 to 500,000. Faced with these losses, DreamFolks announced on September 16 that it would discontinue domestic lounge services immediately, calling the impact material but assuring that other domestic offerings and global operations would continue.
Legal Hurdles: The Delhi High Court Ruling
A key blow came from the courts. DreamFolks was locked in a dispute with Encalm Hospitality under the Arbitration and Reconciliation Act. The 2022 agreement between them, valid for five years, required Encalm to provide lounge access exclusively through DreamFolks. But Encalm issued termination notices in August and began dealing directly with banks via third-party providers.
DreamFolks sought a restraining order from the Delhi High Court to stop this. On September 16, Justice Amit Bansal ruled against them, stating that DreamFolks failed to prove exclusivity in its bank contracts. The court noted that banks could partner with multiple providers, and there was no bar on Encalm using third parties. This verdict effectively cleared the way for operators to bypass DreamFolks, sealing the decision to exit the domestic lounge segment.
Stock Market Fallout: Investors Feel the Pain
The announcement hit DreamFolks’ stock hard. Shares dropped 5 percent on September 17 to about 131 rupees on the Bombay Stock Exchange. The decline continued, hitting a 5 percent lower circuit for two days straight, reaching 124.51 rupees on September 18 and further to 118.28 rupees by September 19. Year to date, the stock has plummeted around 67 percent, from a 52-week high of 512.85 rupees to a low of 118 rupees. The company’s market capitalization now hovers around 663 crore rupees.
This volatility reflects broader concerns about DreamFolks’ growth. With lounges forming the bulk of revenue, analysts worry about replacing that income. The exit has sparked debates on the vulnerability of aggregator models in competitive sectors, where larger players can disrupt established intermediaries.
How This Affects Travelers and Cardholders
For everyday users, the shutdown means uncertainty at the airport. If your credit or debit card offered lounge access via DreamFolks, you might find doors closed at domestic terminals. Banks are responding variably. IDFC First Bank switched to Elite Assist on September 15, keeping the same number of complimentary visits at over 45 lounges but pausing web pre-bookings temporarily. ICICI Bank continues international access through DreamFolks but ended domestic operations in July. Axis Bank’s programs are mixed, with some still linked but others shifted.
Other banks like IndusInd, Kotak Mahindra, and YES Bank remain tied to DreamFolks for now, but no suspension notices have been issued. HDFC Bank discontinued swipe access for some cards in June, hinting at a broader move. SBI Card users are unaffected, relying on Priority Pass or in-house options.
Travelers should check their bank’s app or website for updates. In the meantime, carry a backup card or arrive early to handle denials. During peak festive seasons, this disruption could frustrate frequent flyers who count on lounges for comfort.
DreamFolks’ Path Forward: Pivoting to New Horizons
Despite the setback, DreamFolks isn’t folding. The company plans to expand global lounge operations, which remain active. It’s also exploring alternative services for clients, such as premium car pickups, visa assistance, golf access, railway lounges, wellness packages, and social clubs. Management has hinted at strategic partnerships and acquisitions to diversify beyond airports.
In Southeast Asia and the Middle East, DreamFolks aims to grow by teaming up with local players. These moves could offset losses, but rebuilding revenue from scratch will be challenging. As Kallat put it, the industry is evolving, and DreamFolks must adapt to stay relevant.
Recommended Readings
For insights into business disruptions and innovation, consider these books:
- “The Innovator’s Dilemma” by Clayton M. Christensen: Explores how established companies can be overtaken by newcomers.
- “Zero to One” by Peter Thiel: Offers thoughts on building unique businesses in competitive fields.
- “Shoe Dog” by Phil Knight: A memoir on navigating challenges in growing a company from scratch.
FAQ
Q1: What exactly happened to DreamFolks’ domestic lounge services?
A: DreamFolks discontinued access to domestic airport lounges on September 16, 2025, after key partners like Adani Digital, Encalm Hospitality, and others ended contracts. Other services and global lounges continue.
Q2: Will my credit card lounge access still work?
A: It depends on your bank. Some, like IDFC First, have switched providers. Check with your issuer for updates; international access via DreamFolks is often unaffected.
Q3: Why did partners leave DreamFolks?
A: Airport operators like Adani and GMR are building direct systems to connect with banks, cutting out aggregators. This reduces costs and gives them more control.
Q4: How has this affected DreamFolks’ stock?
A: The stock has fallen sharply, down about 67 percent year to date as of September 2025, reflecting concerns over revenue loss.
Q5: Are there alternatives to DreamFolks for lounge access?
A: Yes, options include Priority Pass, direct bank partnerships with operators, or new aggregators like Elite Assist. Premium cards often have backups.
Q6: What is DreamFolks doing next?
A: The company is expanding globally and offering new services like visa help and wellness packages to diversify.
Conclusion
The DreamFolks airport lounge crisis highlights the fragility of middleman businesses in fast-changing markets. What started as a dominant force in India’s travel perks has now retreated from its core domestic segment due to partner exits, legal defeats, and competitive pressures. While investors grapple with steep losses, travelers face immediate inconveniences, and the company shifts focus to global and ancillary services. The coming months will reveal if DreamFolks can rebound or if this marks the end of an era. For now, it serves as a reminder that even popular perks can vanish overnight in the dynamic world of aviation.
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