Lounges Accuse Priority Pass Of Not Paying Up

Filed Under: Travel

Here’s an odd dispute, that could have bigger implications…

Guangzhou Airport lounges stop accepting Priority Pass

Guangzhou Baiyun International Airport has quite a few Priority Pass lounges. Even though they’re branded differently, most of them are run by the airport. There are new reports that several of the lounges at the airport have stopped accepting Priority Pass.

What’s the reason? There are notices at the lounges stating that Priority Pass has stopped paying for lounge access, dating all the way back to the beginning of the year.

Reader James was kind enough to translate the notice for me, and apparently the message roughly states the following:

Notice of Ceasing to Provide Service for Priority Pass Members:

Dear Priority Pass Members:

Since Priority Pass (A.P) Ltd have stopped paying us the associated fees from 1/Jan/2020, and in order to protect our legal rights, our company have decided to stop providing further services to Priority Pass members, effective 1/Aug/2020. Sorry for the inconvenience and thank you for your understanding, in the meantime, Priority Pass (A.P) Ltd will bear the relevant legal responsibilities. If you have any questions, please call Priority Pass (A.P.) Ltd. China Mainland: +86 400 120 2461 Hong Kong SAR:+852 2866 1954.

Guangzhou Baiyun Airport Business Travel Ltd.

China Southern Lounge at Guangzhou Airport

What’s going on here, exactly?

While I’m sure there are often issues behind the scenes between Priority Pass and member lounges, I don’t recall ever seeing anything public in this way.

I know Priority Pass generally pays lounges with a delay of one or two months, but what would cause Priority Pass to not pay lounges for this long? My first thought was wondering whether Priority Pass is having financial issues.

That ultimately wouldn’t come as much of a surprise, given how the travel industry at large is currently suffering, and all kinds of travel brands are having liquidity issues.

@FATIIIAviation reports that allegedly Priority Pass is withholding payments to many Chinese airport lounges in an attempt to get them to accept a lower fee. Allegedly a lot of smaller airports have agreed to this, while Guangzhou Airport hasn’t, which is why we’re seeing this dispute.

Guangzhou Baiyun Airport

Update: statement from Priority Pass

As an update, Priority Pass has issued the following statement regarding this situation:

Priority Pass is aware of the temporary restricted access for members to the Priority Lounge at Guangzhou Baiyun International Airport. This was due to a misunderstanding between Priority Pass and Guangzhou Baiyun International Airport Business Travel Service Co., Ltd, which has now been resolved. The lounge will reopen shortly to members.

We can also confirm that throughout the pandemic we have continued to pay our 1,300+ partner lounges and airport partners in line with our agreed payment terms. Any concerns from partners should be addressed to the Priority Pass finance department who can investigate if required.

Priority Pass’s parent company, Collinson, is a £1bn business that is built on 30 years of success, operating globally across multiple sectors and product lines. As a private family-run business, we do not have any long-term debt, benefit from a strong balance sheet and are well funded. We have and will always be a customer-focussed organisation and have, during this time, maintained focus on roadmap delivery of critical product developments, as well as launching entirely new propositions to support clients at this time, including Test-on-Arrival, our airport COVID-19 testing solution.

China continues to be a key market for us, and we are continuously investing in services in the region to provide our customers with the best possible experience when travelling.

Bottom line

Lounges at Guangzhou Baiyun International Airport have stopped accepting Priority Pass as of August 1. What makes this most interesting is that there’s a sign publicly claiming that this is because Priority Pass isn’t paying lounges.

Ultimately we can’t know with certainty what is going on here, though it’ll be worth watching to see if other lounges adopt similar policies, or if this is an isolated dispute. Sources suggest this has to do with Priority Pass trying to negotiate down the price of lounge access at Chinese airports…

What do you make of this situation?

Comments
  1. I don’t know how it works, but it surprises me there would be delayed payments. Surely usage is low so Priority Pass is sitting on extra budget relative to what they imagined paying out (unless their model relies heavily on new member revenue to survive, like a pyramid scheme … haha).

    I would have assumed it’s like all the banks who are now sitting on excess points because people aren’t hitting the expected spending in bonus categories due to reduced travel / work expenses.

  2. Priority pass has suddenly become valuable to me as they are often the only lounges open in many airports around the world.

  3. Priority Pass has a website. It has a link to Contact Information. The information there includes:

    For media inquiries, please contact pr-prioritypass [at] collinsongroup [dot] com

  4. I was in SLC airport last year where there was an Italian restaurant that was listed as accepting PP. Asked the manager about it before I ordered and she said it was no longer accepted because PP hadn’t paid them.

  5. You would think PP would be flush with cash now. With very few people traveling they are paying very little out to the lounges. At the same time they are still getting the same membership fees from PP holders through Chase, etc.

  6. I wouldn’t be surprised if Collinson (the owner of Priority Pass) are in financial trouble. They made over 200 people redundant in May after not making any money for months whilst being and have been inundated by travel insurance claims from Covid-19.

  7. I wish priority pass would do a better job of keeping the lounges that are open/closed up to date. Their business is after all focused on lounges so they could try to keep things up to date.

  8. Very interesting, let’s see what the future holds for Priority Pass.

    Although from a lounge perspective, no big deal. The ‘Premium Lounge’ as it’s called where most international airlines at CAN send passengers (EK, QR, etc.) is also the Priority Pass lounge in that terminal and it is, frankly, a dump. It always felt somewhat unhygienic pre-COVID-19 with all the passengers packed in. Lots of people with their shoes off, general lack of lighting/dark atmosphere and questionable cleaning didn’t help. I’m not even sure I’d go in it currently. I paid an exorbitant amount of money for a Starbucks (like £8/$10) last time I flew QR out of CAN and left early to sit there instead.

    Is there a mainland Chinese airport that has even a half decent lounge if you exclude the couple of CX and EK ones?

  9. If Priority Pass had financial issues, I doubt they would be withholding payments at just 1 single lounge. Sounds like an isolated dispute.

  10. Priority pass has suddenly become valuable. They are often the only lounges open in many airports around the world.

  11. Not paying up is obviously a no go. But I would not have expected they are in financial distress, rather the opposite, given their subscription revenues and their subscribers now not being able to travel.

  12. Perhaps they suspect fraud at that lounge, fake visitors just to drive up the bill. It is China, after all.

  13. WR2 do you think a lounge just sends PP a bill and they just pay it?

    My experience is that lounges scan your card / app or make a note of your name and number. They need that info to bill PP

    PP should get those details so it can verify that real PP members were admitted and a lounge (wherever it is in the world even in the USA) isn’t just making names and numbers up. Heck PP could even ask a member if they used X lounge on a certain date.

    Plus if PP suspected fraud they would be doing something about it wouldn’t they? There appears to be no sign of PP suspecting fraud just not paying the lounge full stop.

  14. @ChrisC <—Found the PRC hack.

    There have been cases reported before where PP stopped paying because they suspected fraud and were reviewing the transactions. China is notorious for fraud. These are facts. I'm merely speculating and have no inside info on this specific case, but it seems odd for you to vehemently reject the possibility without also any inside info. Hence, you're probably a PRC hack.

  15. @ChrisC

    I don’t think the lounge is scamming PP, but lets be honest, it’s not that hard to do. Just attach a small camera to the scanner and take a picture of the code whenever someone enters. Then just scan a random same of those codes every once in a while for “admissions”.

  16. Many Priority Pass lounges are poor in service, indicating that PP does not pay these lounges on time. PP has not been a good company before the pandemic, and this pandemic only makes things worse for lounges.

  17. I suspect their revenue stream has dried up due to the lack of new members, and current members who pay personally (not through credit card membership) are not renewing their PP membership.

  18. Prior to AMEX I carried a PP card and paid for each visit. The skim on that revenue might have dried up. I imagine (hope) this is a dispute over fee negotiations or investigating billings.

  19. All I can think about is that strangely deluxe glass bottle of Pabst that the CZ lounge has up top…

    I hope I never have to go there again.

  20. Although there’re bright spots, I can’t really be sorry for most terrible Chinese lounge that squeezed by Priority Pass (Or Lounge Key, Dragonpass etc……
    Also, unlike US where everyone have free PP membership, a lot of people from Europe and elsewhere really pay for each visit.

  21. @Tom there are some good non EK/CX good lounges in China. Like Hainan Airlines’ fortune wing lounge @ PEK T2, China Eastern’s lounges @ Hongqiao and if we insist on political correctness, EVA and CI’s @ Taipei.

  22. PP is useless. Lounges are small, not comfortable, no amenities! Tried to use at Air China in Chengdu last year – not allowed in. United has not taken PP in about 5 years! I have it through a credit card. Not surprised at PP not paying lounges .

  23. @Tom

    I, as an expat, worked in Shanghai for nine years. You are unfortunately spot on – the removal of shoes in public places is socially acceptable in Chinese culture. :-/

  24. I’ve just been made redundant by Priority Pass.

    The reality is, they make very little money on the annual membership cost and the cost of lounge entry. The majority of revenue they earn goes straight back to the lounges, their profit margins are so low.

    It wouldn’t suprise me in the slightest, if this company are having financial problems. They have been hugely impacted by the current climate, especially with the amount of travel insurance claims they have had to pay out.

  25. WR2 – ridiculous to say I’m some sort of Chinese hack!

    Says a lot about you that you jump to that conclusion with zero evidence or knowledge about me. Two can play at that game so perhaps you are an anti China hack?

    I never said there wasn’t fraud just that it would be quite hard to do. You’re the one that is adamant there is fraud but you have zero inside info either. Which is the same amount as I have! Posting an idea about another possibility is not the same as denying that another possibility has happened.

    And if PP suspected fraud they would have actually done something about it and not Just stop paying the bills.

    If the same name(s) appear on the visitors list it’s not hard for PP to send those people an email asking if they were there on so and so dates and that would prove the fraud if they replied ‘no’

    Has PP done that? Likely not because some people would have posted on blogs like this one asking if others had had similar emails and did they know anything about it.

  26. Priority Pass has just published a statement on its official Wechat account in China saying that all issues with Guangzhou Baiyun airport have been resolved and access should be restored shortly.

  27. It’s really not on for a company such as Priority Pass to hide behind a meaningless term such as “misunderstanding.” Their lack of openness and honesty would make me very wary of them.

  28. I have always had very good luck with PP lounges in China. Putting politics aside, I’ve always found them to be some of the best PP lounges in the world, especially the ones at Guangzhou.

  29. @WR2 based on experience, I can tell you that airport restaurant affiliated PPs in the US are the ones who make fraudulent claims. I was at an airport restaurant that accepts PPs and they listed two guests on the bill when there was only one. They wanted PP to pay extra money by scamming them. So, it can happen anywhere.

  30. for whoever might be interested in the 2019 financial data: https://s3.eu-west-2.amazonaws.com/document-api-images-live.ch.gov.uk/docs/qCgY7KFjuxG6jsFLDeeJML8Blj6bveSPLc9hB_dotTs/application-pdf?X-Amz-Algorithm=AWS4-HMAC-SHA256&X-Amz-Content-Sha256=UNSIGNED-PAYLOAD&X-Amz-Credential=ASIAWRGBDBV3LC4QLJVB%2F20200803%2Feu-west-2%2Fs3%2Faws4_request&X-Amz-Date=20200803T064451Z&X-Amz-Expires=60&X-Amz-Security-Token=IQoJb3JpZ2luX2VjELr%2F%2F%2F%2F%2F%2F%2F%2F%2F%2FwEaCWV1LXdlc3QtMiJHMEUCIFabPp3%2FaOrFExzvHLPJ4sUDOzUjAGzRlyUDXSwB4hsuAiEAobXaclAX9hGfC%2B9fvAmTSX0COLBlzk%2BdomQa3mCljmEqvQMIg%2F%2F%2F%2F%2F%2F%2F%2F%2F%2F%2FARACGgw0NDkyMjkwMzI4MjIiDLb0CDLBaozUrU77gyqRA2HYHucMBA2GUO23dp%2BH5kuH07QYtsd%2BlNM%2B0585tz1cLQTDFvx%2FNE7j1LjeiCYG%2BAe%2F%2BXxV%2FYcrOmBjYpR6WkUUcjwjUATh1XaPxMhfc%2B327TALpzTlvuQKm5a64MKwF3Kwpg1aa%2BAbDHQQJZCybfVPG4fNa%2B86UyqSoFEVuWbQgBUdP92nbp%2FrEftM4MEUCqkkXpiYd0fr2vmOVITRkKaejD5yTpiNY28VVpNF2R0bT80c7Dzsjk%2B3Em2v4p059PmldtWDgOLEBh%2F0D59DV52TEdMWt9v%2FtnGF%2FdU74bLib0t4OSHnYwTQ51ttVe6aE8hEIpJV537WS3KnLRQ2KVD%2BSgnTbHGxTYZf4EOkKBKG2k4LsxuhT%2FeU4b0MAXjVj5uR7QVse2dkHGKVuqEFrxi0kgJJbJlvxh38HNxkK4gKuHNFTf6e7fDbslnXDkPN%2BRvRvdg1LgIVnX1g5TWw3PT%2B7aLoxBxPotmMM8E2FwuxSPMLCDg37n8ufon8bILpWfeGmbvki0HZjLyRwINkwwE1MOXUnfkFOusBwzP8Z0nbO8pI9c3gSh2gIS2LsCSeLuK6ltQtPyDvLHzXYM4OztQNlxdhhUJ9bUhsSGPfBnXO%2FiWgH8TPIKqAmHs8t9%2BXh4sWlNQVgwtJR7VUYefp%2F8087TUeXPquKsC3vTTI4H3gWNm1exZgthN6pk0bB4a%2BtRyZIcxa38TTSqykrqDA8JEAyy7mvEQ%2F7GI7BQt67g13DrB2q0QWlsNaOedNZpCtC0pyFGdlPfq63Bkui6x4Aj38OLxq08QQwr44tHhjDwcnrki2KIJioWuietcxUZ9azSYLS9aK9DKzxFB%2Fypfxb12RwTqH3A%3D%3D&X-Amz-SignedHeaders=host&X-Amz-Signature=1c1ce2115cbd6c45e55b4ff8f14016efd467af05ce013881b1e347078a237f06

  31. I think it has to do with lower demand for their lounges in China. Think of it that most people that have a priority pass card have it based on an american credit card.

  32. Priority Pass’ parent company is a UK privately owned company – Collinson, and has been severely impacted by Covid-19. Priority Pass has been incredibly lucrative over the last few years, mainly driven by exponential demand (especially from US card issuers) outstripping supply, but Priority Pass actually makes very little money on memberships, and just a small margin on each visit, which is paid in arrears. Collinson has other divisions focussed on Loyalty, Insurance and Assistance, all of which have consistently lost money for years and have relied entirely on Priority Pass to keep drive group profitability. But if you dig into the annual accounts (available on UK Companies house), you can see that profitability significantly lags the growth in revenue, which has been accelerated by 1) lounge visit volume and 2) Brexit making USD revenues from US bank more valuable in GBP.

    Collinson’s overheads are terrible….they are inefficient and their systems are antiquated, so with COVID-19 virtually eliminating Priority Pass lounge visits overnight has had a huge cashflow impact, and the rest of the business is primarily focussed on Travel & Hospitality sectors, so is just an added drain. The company has made significant layoffs, and is leaning heavily on the UK’s Coronavirus Job Retention scheme to pay many others, which is now starting to be scaled back.

    It does not surprise me that they are trying to negotiate lower rates with lounges, given how thin the revenue is now and the slow recovery. I think they have aggressively eaten into their cash reserves over the past few months, and cannot continue to operate with the same metrics going forward if they need external finance to keep the business running.

    I expect Covid-19 will accelerate banks’ own plans to disintermediate Priority Pass to optimize lounge benefits…..Amex was already on this path with Centurion lounges and the acquisition of Lounge Buddy, and Chase cannot be far behind given how much they spend with Priority Pass.

  33. Seems PP paid up, as per terms.

    Seems PP’s negotiating tactic failed this time – and rightly so.

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