We’ve not seen many startups venture into the area of consumer rights, but here’s one that will be on your side the next time you fly. Hong Kong-based AirHelp helps flyers process compensation claims for flights in Europe that are delayed or cancelled, or where you get bumped from the flight.
Airhelp believes that “you could be entitled to compensation of €250 to €600 ($344 to $826) if your flight is delayed by more than three hours, cancelled, or overbooked.” These claims can be filed even if the case goes back up to three years. Airhelp collects as many compensation claims as possible, processes them, and will take 25 percent commission out of every successful claim.
Co-founder and CEO Henrik Zillmer first got the idea when his flight got delayed for more than three hours and he wasn’t informed about his passenger rights. And when he found out about his rights, he was hit by a maze of links on the airline website when wanting to submit his claim. Afterwards, he did not hear back from the airline.
According to his research, “more than 20 million passengers every year are entitled to compensation (an average of €450 ($620) per passenger) but less than one percent actually get the compensation mainly because air passengers don’t know their rights and because airlines don’t inform them and make it as difficult as possible to claim it.”
Launched in January, the team has processed over 4,500 claims from 35 countries. The startup is built by experienced founders Henrik Zillmer, Greg Roodt, Nicolas Michaelsen, and Morten Lund. Zillmer is an ex-Rocket Internet head of product management while Lund has either co-founded or co-invested in more than 85 tech startups, including Skype. AirHelp wrapped up a seed round of funding earlier this year from a group of angel investors.
Filing European law suits from Hong Kong
Although the team only makes claims on flights to or from Europe, it is based in Hong Kong. Zillmer explains that he has helped set up a lot of companies for Rocket Internet, and he found that Hong Kong is the easiest and cheapest place to build a corporation. The city also has friendly taxation laws on revenue made outside of Hong Kong, stamp tax on investments, and general value-added tax on services offered.
While European flights can compensate for delayed, cancelled, and overbooked flights, domestic flights in Asia only cover overbooking. But passengers on flights from Asia to Europe and vice versa can still get compensation if they are delayed or the plane is cancelled. Zillmer says that they have won a lot of claims against Singapore Airlines, Thai Airways, Malaysian Airlines, and Cathay Pacific. Often the companies themselves are completely unaware of their passengers’ rights, so the team has to bring their lawyer in to explain.
Zillmer explains the team faces three big challenges in this kind of business. First is about creating awareness among the public about their compensation rights. Second is how to automate the file claiming process, which can be very different from claim to claim. He adds “a lot of time and knowledge has gone into what we do and how we do it and we are constantly improving our system and procedures.”
The third challenge is taking on the airlines, especially those which refuse to follow the law or interpret it at their convenience. What’s the secret sauce for AirHelp in this area? Zillmer explains:
Our approach is primarily based on the vast amount of flight data we use to validate the claim. After that, it’s “only” a question of referring to all the previous court decisions on similar cases. If the airline refuses to pay out compensation we either send the claim to the national enforcement body or we go to court. We have the law on our side and the airlines knows this, so in most court cases the airline never shows up! However, there are also a lot of claims that are not entitled to compensation due to, for example, poor weather conditions or an airport strike.
The 16-man team has a couple of lawyers with aviation expertise who analyze all answers and determine whether they should go to court or not. “The actual court procedure is handled by law firm partners around the world,” says Zillmer.
Competition in filing claims
One of AirHelp’s main competitors is Germany-based Refund.Me, which charges only 15 percent commission, compared to AirHelp’s 25 percent. Zillmer says that AirHelp excels when it comes to receiving claims from users. The process to file claims on AirHelp is faster because the company accepts more general claims, while Refund.Me only accepts specific claims. He adds:
We want to help a lot more air passengers (even though some claims might get rejected) and our fee is to cover those extra costs. In addition, we are investing a lot of money in taking the airlines to court in as many countries as possible to force the airlines to pay out compensation. The likelihood of getting compensation outside of countries such as Germany, where Refund.me is from, is therefore higher with AirHelp.
(Update: A Refund.Me representative explains that the reason for Refund.Me’s lower commission isn’t because it’s more selective, but because the team’s technology allows them to make each claim less costly.)
(Editing by Steven Millward)
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