Evaluation Error: TypeError: Cannot set properties of undefined (setting 'innerHTML')
at eval (eval at <anonymous> (plugin:dataview), <anonymous>:10:21)
Attributes
- Air passengers in India grow 11% CAGR.
- The number of credit cards with airport lounge services are incresing.
- There are more people in the airport lounge queue than outside.
- Banks are blood suckers, they do not give free access to lounge to their customers.
- Gross Margin per passenger(FY20, FY21, FY22, 9M23) ₹138 (18.3%) ₹131 (17.1%) ₹128 (16.0%) ₹147 (15.9%)
- You might already have begun seeing posts about crowded lounges and long queues on social! These issues will be solved for with more & larger lounges and contactless access. But the sheer demand this space will see in the coming years is undeniable.
Business
- A lounge will make anywhere between ₹600-₹750 every time you check-in, and the facilitator between the lounges the cards and the customers keeps a neat ~₹130-₹145 take rate!
- This money is paid primarily by Card Networks (Visa, Master, Diners, Rupay) and Card Issuers (HDFC, SBI, ICICI, Kotak), with card networks driving 61% and issuers driving 38% of lounge revenue.
Analysis
- There is no moat here. There are no ‘network effects’ or ‘proprietary technology’ at play here. Anyone with little bit of capital and inclination to replicate Dreamfolks business can do so without any headwinds.
- Railways lounge are an exponential growth business in India. However, high affluent individuals do not go via trains anymore.
- Dreamfolks has saturated the Indian airport lounge market.
- However, it goes well with the India growth story until someone else comes up and try to still its market share. Adani has many airports, what is stopping it to create its own lounges?
Threats
- It is a low margin business, 15% to be pricise.
- RBI can reduce the discount rates on cards, which may reduce the facility of the cards. The users will not buy the cards anymore -> they will not go to lounges.
Conclusion
- I do not see exponential growth here as it is a low margin business.
- However, on a good price it can be bought and swing traded.
Sources
