Making money while waiting for delayed flights
Print Edition
I flew to Chengdu last week on business and was 100 yuan (US$15) richer after arrival. The reason? I bought flight-delay insurance beforehand and was compensated for a one-hour delay.
I spent 20 yuan online for an insurance product sold by China Pacific Insurance Co. It promised between 30 yuan and 300 yuan in payments for flight delays of between 30 minutes and three hours or more.
The company paid me immediately after I landed, via my WeChat payment account. Of course, one has to buy such a product at least 24 hours before departure time and it’s only available for domestic flights.
As a frequent business traveller, I think buying at least one flight-insurance policy is a nice way to mitigate the frustration of sitting in an airport, waiting for a delayed flight to leave.
Recent weather conditions in Shanghai — rain and electric storms – make it all the more attractive.
More than 140 flights were canceled and about 120 more were delayed at Shanghai’s Hongqiao and Pudong airports on the single day of June 28, due to stormy weather, the Shanghai Airport Authority said.
In summer, Shanghai often faces “yellow” and “red” weather alerts because of thunderstorms and heavy rains, which reduce takeoff and landing capacity at the city’s two airports.
Besides bad weather conditions, machinery malfunctions and problems with traffic control are major reasons behind delayed flights.
Among the top 61 airports globally, Shanghai’s two airports last year had the worst record for on-time arrivals and departures. Only 37.1 percent of flights at Hongqiao made it to the gate as advertised. Only 37.3 percent came in on schedule at Pudong, according to US-based flight data site FlightStats.
Chinese regulators don’t exactly agree with those figures because they use a different calculation from overseas regulators, but they do admit that Shanghai’s airports have a pretty abysmal record. In the first quarter, the average departure delay was 39 minutes in Pudong and 33 minutes in Hongqiao.
Mio Chen, the Shanghai editor of an IT website who frequently travels to Beijing, Shenzhen and Chengdu, said flight-delay insurance is a “necessity” for business travelers.
“It’s a protection against delayed flights and a salve for the bad moods that result,” said Chen.
She received 2,500 yuan in flight insurance payments after waiting almost six hours at the Beijing airport for a flight back to Shanghai last month. The payments came from three different insurance policies she took out online.
Traditional insurance firms, online travel agencies like Ctrip and Qunar, banks, flight information service providers and social websites all offer flight-delay insurance. Most of them are sold online for small premiums, starting at about 20 yuan. Some banks offer free flight insurance if users buy air tickets with their credit cards.
Most passengers are quickly paid after delays occur, especially if they have online WeChat or Alipay accounts. It can take two working days if payments are directed to bank accounts.
Ctrip, the country’s biggest online travel agency, said summer is a “peak season” for delay insurance.
Rising popularity
More than 50 percent of passengers choose to buy such insurance when they book tickets or tours through Ctrip. The maximum payout is 300 yuan for a delay of three hours or more.
In June, Ctrip’s sales of delay insurance surged about 50 percent from a year earlier. The ratio of passengers who get payments from these policies almost doubles in summer, said Ctrip, which declined to divulge more detailed figures.
Flights departing afternoons and evenings, especially those headed for southern China coastal areas, are most likely to face delays, and passengers booked on them are most likely to take out insurance, said Ctrip.
Zhongan Insurance, founded by Pingan Insurance, Alibaba and Tencent, offers users more delay insurance options. It allows buyers to send insurance policies to friends on social websites like WeChat, and payments start from minute one.
The sales of delay insurance jumped 43 percent year-on-year in 2016, said Zhongan, which is a partner of Ctrip, Qunar and flight information service provider Variflight on the insurance front.
However, industry officials warn that policy buyers should carefully read the small print attached to these policies.
First, there are different calculation methods about what constitutes a delay time. For example, is it based on time of departure or time of arrival?
Chen said she waited for more than four hours in Shanghai Airport for one delayed flight last month. She said she expected compensation of 2,000 yuan. But she failed to get that amount when her flight finally arrived three hours and 59 minutes late. Obviously, the pilots clawed some of the lost time back during the flight.
Secondly, there is a risk of insurance services being temporarily out of service or disappearing altogether. For example, Zhongan’s service was not available for about a week after June 20 because of “data connection problems.” And an insurance product offering users high-value compensation of up to 2,000 yuan suddenly disappeared without any explanation.
Thirdly, you have to buy all these insurance products 24 hours before a flight is scheduled. Fair enough.
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