Middleman watch: AirHelp (series, #2)
2nd installment in my deep dive into a middleman between passengers and airlines
Photo by Jan Vašek on Pixabay
Henning von Vogelsang, the airline passenger from the previous article in this series, wanted to get out of his contract with AirHelp, the claims agency by whom he felt duped into signing over his rights. Frustrated at not seeing any official process to cancel the contract, he took to Twitter.
In a barrage of angry tweets tagging @theairhelper, he called out the company’s “extremely high fees,” expressed surprise that a reputable company like Expedia was “in bed with AirHelp,” and even poked fun at the AirHelp logo, which to him looked like an airplane about to crash. He peppered his tweets with the hashtag #scam.
The tweets got AirHelp’s attention. A representative from the company emailed him (apparently wanting him to “stop the shitstorm on Twitter,” as von Vogelsang put it), and went on to release him from his contract. “Apparently it does help when you tell a company that their fees are not okay,” he tweeted then.
Von Vogelsang was glad to be free of AirHelp and its fees—but he was no closer to collecting his compensation from the airline that had caused his long flight delay.
A booming industry
EC 261 requires all airlines flying out of European Union member nations to provide passengers with compensation for certain delays and cancellations—and for all European airlines flying into the EU to do so, as well. (The United States has no similar regulations to protect passengers—but Canada recently passed a law similar to EC 261.)
EC 261 has a major limitation, though: it doesn’t compel the airlines to make it easy for passengers to get paid. So the airlines don’t go out of their way to make it easy.
For example, when von Vogelsang did a Web search for “EC 261 claim” and the name of his airline, none of the top results were for pages on the airline’s Web site. If a claim form is there, it seems to be buried.
Some airlines do a better job than others, and all presumably fulfill their legal obligation, but I haven’t come across a really user-friendly process such as a simple Web form on any major airline’s site.
AirHelp is not as passenger-friendly as it would have passengers believe.
What instead typically comes up in the search results for EC 261 claims are articles and discussion threads from third-party sites like FlyerTalk—and pages of various claim companies: companies with names like ClaimFlights, SkyRefund, FlightRight, and of course AirHelp.
Much the same thing happens when passengers grumble on social media about airline delays: claims agencies jump in to offer help more eagerly than airlines do.
That is one of the ironies of the flight-compensation business: although airlines don’t like claims companies, the airlines have actually paved the way for claims companies to step in. Weak and uneven government enforcement by EU member states has contributed to this effect.
There are so many claims companies now that it is hard to count them all. One shadowy Web site, which appears to be an aggregator or comparison site but is secretive about its ownership and business model, lists nearly 40 claims companies—including two in Lithuania alone.
Several claims companies have actually formed their own political lobby, the Association of Passenger Rights Advocates (APRA). Founded by AirHelp executive Christian Nielsen, APRA currently lists only a handful of members, AirHelp and four others. The group, whose stated mission is to promote and protect passengers’ rights, obviously benefits from EC 261; so it is not surprise that is in favor of keeping EC 261 unchanged from its original version (EC 261/2004)—even though changing the regulation to make compensation automatic seems much more passenger-friendly.
The adversary of my adversary isn’t necessarily my ally
The claim agencies’ lobby’s stance on automatic compensation is perhaps the single biggest piece of evidence I encountered that AirHelp is not as passenger-friendly as it would have passengers believe.
Last year, the European Court of Auditors issued a report concluding that “EU passenger rights are comprehensive, but passengers still need to fight for them.” To mitigate the problem, the report recommended (among other ideas) requiring the airlines to issue automatic compensation to passengers who provided the necessary information when they purchased their tickets. Automatic compensation would change the default, thus shifting most of the burden from the passengers to the airlines. It would also probably reduce the costs of educating consumers about EC 261 and of enforcing the regulation.
Naturally, the airlines balked, since the current claim requirement keeps more money in the airlines’ pockets; but, as reported in Politico, the claims agencies (through APRA) resisted, too—they sided with the airlines.
The AirHelp executive’s argument, that implementing the proposed practice would jeopardize passengers’ privacy and raise antitrust concerns, seems disingenuous given his vested interest in the status quo—particularly since at least one consumer rights group was in favor of automatic compensation.
This situation reminds me of the efforts by Intuit and H&R Block to thwart attempts to simplify U.S. federal tax filing; if taxpayers can file easily through pre-filled tax forms, both companies would lose a huge source of their revenues. These companies in the tax-preparation business—and AirHelp in the passenger claims business—aren’t just failing to make life easier for customers when they can; the companies are actually spending money to lobby against such measures.
Yet a big part of AirHelp’s marketing message is an adversarial stance against the airlines. Fliers hate airlines, and AirHelp plays to this sentiment.
In some of its marketing, AirHelp refers to the airlines’ “complicated” forms, exaggerating the difficulty of filing an EC 261 claim yourself. It is certainly true that airlines don’t go out of their way to help you file a claim, as I show above, but most airlines do have forms you can fill out. (Even United Airlines, not exactly a paragon of customer service, has a downloadable form you can find through Google.) Free third-party resources (like newspaper articles and discussion forums) have links to these forms, too. And the European Union provides an all-purpose passenger-rights complaint form that you can submit to any airline. These forms do take some time to complete and submit—but they are not as bad as AirHelp will have prospective customers believe.
AirHelp also exploits people’s hatred of the airlines in its PR efforts: it uses its data about airlines’ on-time performance to publish annual lists of the best and worst airlines (lists that get picked up by media outlets, including Bloomberg and Newsweek). Between the lines of these reports is the implication that AirHelp is watching airlines’ every move, and that it is standing by to help passengers.
Airlines don’t take kindly to being put on a worst-of list by AirHelp—one airline ranked low in an AirHelp report characterized AirHelp as an “ambulance-chasing claims management company” (likening AirHelp’s tactics to those of opportunistic personal-injury lawyers).
But just because AirHelp and the airlines don’t seem to like each other doesn’t mean AirHelp is looking out for the best interests of the consumer, either. Its business goal is to earn a commission from as many customers as it can, and whether the individual customer gets a good deal in the end is another story.
Where to read more
You can follow me here or subscribe to my newsletter if you don’t want to miss a future article. I’m also happy to hear from readers. Do you have questions I might be able to answer in a future article?
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.