Airport lounges are the embodiment of

everything wrong with our modern

economy. [music] From the shifting

dynamics of what it means to be wealthy

to shipflation, financialization, and

conspicuous consumption, the exponential

proliferation of these little rims of

manufactured superiority are a great way

to measure some underappreciated changes

in the world over the last 20 years.

Now, you might think that the 500%

increase in the number of airport

lounges over the last two decades is

little more than yet another sign that

rich people are getting even richer,

which is not exactly shocking anymore.

But actually, it's the exact opposite of

that. Airport lounges are not for rich

people anymore. It's for people who

think this is how rich people travel. In

the year 2000, the market for luxury

travel was far smaller than it is today.

There were less than half as many

international tourists globally even

after accounting for the smaller overall

global population and the people who

were flying in premium classes were even

rarer still. Take the seat map of the

world's largest passenger jets as an

example. In the year 2000, this was the

standard seat configuration that

Singapore Airlines used on their Boeing

747 along popular mass market routes

like Changi to LAX. 3/4 of the floor

space and over 80% of the passengers

were flying in regular economy class.

The secondstory bubble was reserved for

business class passengers paying around

$3,000 for a one-way ticket. This was a

popular option with corporate travelers

who didn't have to pay out of their own

pocket, but still had companies willing

to cover the cost for them to arrive at

their destination refreshed and ready to

work. On top of that, at the very tip of

the plane, there was an ultra exclusive

first class, where tickets typically

went for around $6,500.

These seats offered lie flatbeds before

it became the industry standard in

business class and also typically

offered higher-end food and drink to

luxury focused travelers. For the 30 or

so passengers in these premium classes,

one of the biggest perks of these seats

was the lounge access that let them wait

for their flight in a separate quiet

area with some catered refreshments. Now

compare that to today. Singapore

Airlines has retired the 747 and instead

uses the Airbus A380 as their largest

jet in their fleet. So admittedly, it's

not a perfect apples to apples

comparison, but the trend is still

pretty clear. Regular economy seating

now only makes up around 40% of the

floor space and just under 60% of the

total passenger count. In its place has

been a substantial increase in business

class seating as well as the

introduction of a premium economy class

which when combined now take up half the

space aboard the massive aircraft.

However, the other extreme has also

shrunk. Even on this larger plane, there

are now only six firstass seats, half as

many as on the 747, but they're each

significantly larger and more luxurious

than they were 20 years ago. Now, with a

cursory glance, this almost seems like

the middle class of air travel has

expanded at the expense of those at the

very top. If this is true, it could help

explain some of the trends of airport

lounges becoming far more popular,

accommodating a larger share of larger

planes. Airlines have been proud to talk

about this as a growing market

opportunity. And for what it's worth,

air travel has become far more

affordable for the average person. But

this is missing the bigger picture. Back

in early 2000, a first class seat wasn't

truly the pinnacle of commercial

offerings. For ultra-wealthy individuals

or high-end business people traveling

along high value international routes,

there was the Concord. Tickets on the

most popular route between JFK and

Heathrow cost around $12,000

back in 2000. Adjusted for inflation,

that's more than $24,000

today. This was an extremely high-end

service that only appealed to the top

0.1% for whom the few hours they would

save on the crossing was worth more than

the 100% premium they would pay over a

regular old firstass seat. The market

was so limited that it only made sense

to run this aircraft along very select

routes between the world's financial

capitals. This wasn't helped by the fact

that the plane couldn't go supersonic

over populated areas. Now, those planes

are no longer flying, but that hasn't

really mattered. In 2000, an

inflationadjusted $24,000 plane ticket

represented roughly 0.2% of the 14

million net worth you would have needed

to be in the top 0.1% of Americans.

Today, to be in that same group, you

would need a net worth of $55 million.

And 0.2% 2% of that is $110,000,

which is more than enough to charter a

transatlantic capable private jet to fly

exactly the same route. For comparison,

that same expenditure would be like the

median American spending 530 bucks on a

plane ticket. Not nothing, not something

that they could do every day, but also

not a huge expense in the grand scheme

of things. This is also just comparing a

single seat to an entire aircraft

capable of carrying up to 10 additional

passengers in a far higher level of

luxury. For wealthy people with a family

or small entourage, this pushes the

economics even further in favor of

flying private. In the early 2000s, long

range private aviation did still exist,

but it was a far smaller market than it

is today. Services like NetJets and

Flexjet have additionally made it far

easier for people who can't quite afford

to own their own plane outright to still

fly private when the need arises.

Compared to the Concord, private

aircraft are also still just as

timefficient. In the air, they're

obviously much slower, but passengers

can get to the airport less than 20

minutes before takeoff compared to the

minimum 2 hours for commercial flights.

2 hours that would be spent in those

airport lounges. So, the first problem

that these airport cool kids clubs

reflect is not that rich people got

richer. It's that they got so much

richer that they left them behind

entirely. But that by itself isn't the

biggest problem. The biggest problem is

how everybody else is squeezing in. If

you often work on your laptop while you

travel, you might think that jumping on

the airport's free public Wi-Fi or your

airport loung's premium Wi-Fi would be

totally fine. But public Wi-Fi is one of

the number one ways that people get

their passwords stolen because anyone

with a bit of AI prompting can figure

out how to hack your computer and see

what you're doing when you're on an

unsecured network. That's why every time

I use the internet, I use Surf SharkVPN,

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now. All right, so the very top of the

private market has moved out into

private aviation, which is why ultra

premium offerings have become rarer but

more luxurious. However, on the other

end of the market, while the share of

the economy seats may have shrunk on

planes like this, that doesn't

necessarily mean that most people have

moved up. They've just moved these

economy seats onto a different plane

entirely. Budget Airlines have been

growing almost as quickly in relative

terms as the chartered private jet

market. To use Singapore Airlines as an

example again, they now operate Scoot to

capture the growing market of highly

budgetconscious travelers. Most other

major airlines have similarly also

started budget focused subsidiaries.

What this has done is segment the market

far more than it's ever been before. In

the early days of aviation, classes

didn't really exist. Just flying at all

was only done by the wealthy. 20 years

ago, almost everybody was flying in

either economy, business, or first class

with big jumps in between each level.

But today there is budget economy,

mainline economy, premium economy,

business class, regular first class

seats, high-end first class seats, and a

rapidly growing market of private

aviation services. This wasn't some

accident. This was airline companies

identifying shifting market realities

and cashing in on two very distinct

groups of customers. The first are those

that need a way to treat themselves.

It's getting much harder for most people

in most economies to afford the

essential ingredients for normal life.

Housing, health care, and education,

starting a family, even saving for

retirement. All of these budget items

have moved out of reach for most people.

So, a lot of people are giving up and

shifting their spending towards an

alternative lifestyle, which takes

advantage of the few things that have

gotten cheaper. One of those areas is

travel. Ironically, this has given a lot

of consumers more disposable income to

treat themselves to an upgrade anywhere

on this spectrum. By offering smaller

incremental steps, it just makes the

leap a little easier for these customers

to make. One of the most cost-effective

ways for companies to let the customers

indulge is not even through premium

seats, but simply access to a lounge

before their flight. The best part is

that this upgrade doesn't even need to

be offered by the airline themselves.

The largest network of lounges belong to

third-party companies like American

Express and Priority Pass. These

companies either sell separate

memberships to access lounges across the

world or include it as a perk for having

a high-end credit card with a large

annual fee. American Express themselves

have openly acknowledged that they lose

money on their lounges, but they keep

them because they are the most effective

marketing tool to get people to sign up

to a high-end charge card like the

American Express Platinum. For the young

professionals struggling to get ahead,

this is an incredibly compelling

marketing pitch because it gives them

the image of status they will struggle

to find anywhere else. Marketeteers have

dubbed this affordable affluence. It's

no mistake that airports and credit

cards are one of the few places where

social rank is so clearly designated.

The idea of having a firstass grocery

store or premium economy social media

site sounds very strange although they

are trying. Does it make sense for an

average person to spend $895

in annual fees for a service that

effectively just lets them take on more

debt? Absolutely not. But a huge number

of people are still willing to pay it

just so they can get into the special

club before they board their Spirit

Airline flight. 20 years ago, having a

credit card made out of metal and access

to an airport lounge was a major flex.

Today, it's a marketing stunt. However,

it's still been so successful that these

companies have had to deal with a new

problem, overcrowding.

There are so many people willing to buy

into services like status credit cards

that a lot of lounges have had to

implement weight lists in shitifying

what was supposed to be a premium

service. The American Express lounges

have introduced a requirement that

people need to spend 75 grand a year on

their card before they get complimentary

access. And remember, that's on top of a

$900 fee they pay no [music] matter

what. Now, this seems like a potentially

reckless way to get people who are

already stretching themselves to go into

an irresponsible amount of debt. But

this move has also revealed a bigger

problem. It showed that there were

people holding these high-end charge

cards and not spending $75,000 a year on

them. Now, I'm not suggesting that

anybody should be spending this much,

but the only way the membership fees on

something like an Ammex Platinum makes

sense is if it's being used frequently

to book high-end hotels, restaurants,

flights, and experiences. Now, I know it

all sounds a bit silly, but this is a

multi-billion dollar market now fueled

largely by people who just want a taste

of what it feels like to be doing well

in the one environment where it's still

encouraged. Oh, and the points you get

from all this, they are worth less and

less every year. People like to tell

themselves that one day they'll be able

to cash in on their reckless spending

with a seat upgrade, but since 2020,

that's become next to impossible without

significant co-pays and timetable

flexibility. That's because it's easier

than ever for airlines to sell these

premium seats for cash. The second group

of people driving demand for premium

travel are those on the other end of the

spectrum. They may not have had high

income, but they've downsized from a

house and a spending through a

retirement portfolio that's largely been

carried by the longest bull run in

history. Splurgging on a business class

seat is a tree that their income

wouldn't typically allow, but their

lifetime of accumulated wealth can.

There were still wealthy retirees 20

years ago, but just not nearly as many

as there are today. So yeah, airport

lounges are a rapidly deteriorating

service that people are willing to make

an unreasonable financial decision to

get into. Ultimately supported by a

growing market of people who can't seem

to win financially and another group of

people who can't seem to lose

financially. If that's not everything

wrong with the world, then go watch this

video next and find out why your

internet probably sucks.