Middleman watch: AirHelp (series, #1)
A deep dive into a middleman between passengers and airlines—1st installment
Photo by Jan Vašek on Pixabay
Note: Once in a while, I will step away from general insights about the power of three to focus on a single middleman business. My goal for these single-business articles is to show the ways the business creates value by playing specific middleman roles (Bridge, Certifier, and so on), and the ways it falls short of playing these roles well. The focus of the first such article is AirHelp, a middleman between airline passengers and the airlines that owe passengers compensation for flight disruptions.
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This past summer, after Henning von Vogelsang’s flight between Europe and South America was delayed by four hours, he got an email from Expedia, the online travel agency through which he had bought the tickets, telling him he was entitled to compensation from the airline.
Von Vogelsang, a consultant living in Liechtenstein, had been around the block. An expert in user experience and customer experience design, he knew better than most people how companies try to scam consumers, and also had a sense that airlines aren’t exactly a disgruntled passenger’s best friend. Specifically, he knew that an EU regulation (EC 261) requires airlines to pay passengers for certain flight delays, but he suspected that airlines would use every trick in the book to make it a hassle for customers to get what they’re owed under this regulation.
The airlines “want to make it a process without the middleman,” he says, since professionals who file claims all the time can’t be as easily brushed off as the average passenger. He figured that with a trustworthy middleman on his side, he’d have better luck getting his airline to pay.
Enter AirHelp
He already trusted Expedia, so when he read the email from Expedia informing him that “Expedia and our partners at AirHelp can help you get compensation,” he decided to click through. He reached a Web page for AirHelp, a company that says it enforces EC 261 regulation.
AirHelp’s automated process immediately took over; after taking in his flight details, the process quickly told him he could get up to 600 euros for his delay. He proceeded to sign over to them the right to process his claim on his behalf. It was only after this step, he says, that AirHelp informed him of their fee, amounting to more than 30 percent. (AirHelp’s more typical fee is 25 percent, but it was higher in von Vogelsang’s case, presumably because Expedia was also getting a commission for referring customers to AirHelp.)
“They don’t have any description of what they do for this money.”
Von Vogelsang found this maneuver misleading. It seemed like an example of the kind of “dark pattern” that his user-experience background had primed him to recognize: an ethically dubious way for interface designers to prompt users to do things they otherwise wouldn’t do. “They kind of make it sound like you will get the reimbursement up to 600 euros, and only when you do this do you get notice that this high percent is their fee,” he says.
The second problem: “They don’t have any description of what they do for this money.” What’s more, neither Expedia nor AirHelp made any mention of the fact (which he learned about only later) that customers could claim compensation on their own, for free. He tried to cancel his contract with AirHelp, but saw no clear way to do that. So he turned to Twitter, which is where I eventually found him.
My own experience with AirHelp
I had been searching Twitter for customers talking about AirHelp because I had recently had my own taste of AirHelp’s business tactics.
On a trip to Europe this past summer, I experienced major disruptions to both my outbound and return flights, on two different airlines: suffice it to say that both cases were open-and-shut under EC 261, and I happened to know that I could file claims with the airlines on my own; but, like von Vogelsang, I assumed I would have an easier time getting my claims paid through AirHelp. After all, from its marketing messages, I got the impression that AirHelp would serve as both a Concierge and an Enforcer, reducing hassles and using their legal muscle to keep the airlines accountable. I knew about the 25% fee, but decided the company’s efforts as a middleman would be worth it.
For each of the two cases, I got an email from AirHelp telling me they submitted my claim to the airline, and saying that it can take “up to 3 months before we hear back from them” (something they could have mentioned earlier, but didn’t). “We realize it’s a long time,” they added, “but rest assured we will be pushing them for a faster decision than that.”
I did get paid for both flight problems through AirHelp—within only a week for the first flight (so thankful!), but only months later for the second (and only after complaining about the delay and openly questioning the value that the company provides). How were they pushing the airlines, really—and, more important, how effective was their pushing?
My experience left me wondering if I would have gotten similar results on my own, saving myself the 25% percent commission. After all, since AirHelp had handled both claims, yet the difference in results from the two airlines was so stark, it was natural to ask if the speed of claim processing had anything at all to do with AirHelp’s efforts.
A series looking into the company
After talking with von Vogelsang, exchanging emails with an AirHelp spokesperson, and doing extensive research online, I reached several conclusions about the company. My full report on these findings is long (far exceeding any existing write-up about AirHelp that I could find)—so long that I am splitting it into several articles, which I will publish over the next several days. If you read them all, you’ll find out how von Vogelsang’s story ends, learn how AirHelp became widely used despite its shortcomings, and see how the airlines’ desire to evade the spirit of EC 261 has ironically created a cottage industry of companies like AirHelp. But most important, you will get my answers to the central questions driving my research: what does AirHelp do to earn its commission, and is that fee ever worth it? There’s a shroud of secrecy and misdirection in the claims management industry, and I hope my attempt to lift that shroud will help airline customers make better-informed decisions.
So, what I have to say will be of obvious interest to people considering using AirHelp; I believe it can also help other middleman businesses that aim to be true Partners to their customers. Stay tuned!
View the 2nd installment in this series.
Where to read more
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About the author
Marina Krakovsky, the voice behind Power of Three, is the author of The Middleman Economy: How Brokers, Agents, Dealers, and Everyday Matchmakers Create Value and Profit (Palgrave Macmillan). She is also co-author, with economist Kay-Yut Chen, of Secrets of the Moneylab: How Behavioral Economics Can Improve Your Business (Portfolio/Penguin). In her writing, speaking, and consulting, her main focus is on the practical application of ideas from psychology and economics. Her articles and essays have appeared in Discover, FastCompany, the New York Times Magazine, Scientific American, O (The Oprah Magazine), Psychology Today, Slate, the Washington Post, Wired, and more.