Artificial intelligence is set to disrupt the way airlines compensate passengers when their flights get disrupted.
While delayed or cancelled flights are a frustrating inconvenience for travellers, they pose a huge business dilemma for airlines: how to quickly and cost-effectively process hundreds or thousands of compensation claims filed by customers when a plane is late or never even gets off the ground?
It’s the kind of turbulence that hit customers at two of Canada’s largest carriers recently.
On Jan. 14 a systems outage forced Porter to ground all its arriving and departing flights for a few hours. Porter cancelled five flights and 400 of its passengers had to alter their travel plans. On Jan. 17 an IT hardware glitch at Air Canada caused the carrier to delay its flights out of Toronto and prevented customers from buying website tickets and checking in online or in person.
Those are the sorts of incidents that often spark passenger compensation claims. AI can make the entire claims process much smarter and faster for airlines to handle, according to Intelenet Global Services. The Mumbai, India-based company just launched an AI-based solution called iCAN.
Smarter over time
“It’s a mixture of robotics, natural language processing and a little machine learning. Our systems get incrementally smarter over time,” said Bill Hoppe, VP of business development at Intelenet.
“The tool will review the overall claim to make sure all the documentation is there and cross-reference it with a list of disruptions from the airline. If it’s not (on the airline’s disruption) list or the documentation is incomplete, an automated email will go out” to the customer, he said. Compared to iCAN’s automated, analytics-based system, most airlines still use fairly low-tech methods to process claims.
“Customers have to log into the airline’s website, submit documents and complete forms. Then the information goes to the airline and they forward it to a claims processor,” Hoppe explained.
The claims processor tracks the claim, validates whether there was a flight disruption, how long it lasted and whether it qualifies for compensation under the airline’s policy. If the claim is approved, a manual email notification is sent to the customer.
“So as you can imagine, there’s a lot of potential for error,” Hoppe said.
The process can also be time-consuming, said Gabor Lukacs, a passenger rights activist based in Halifax.
“Receiving compensation can take (passengers) several weeks and if you have to take it to court, it can take longer,” Lukacs said.
The time, labour and money an airline spends on processing each claim snowballs when you consider that a major carrier typically gets “upwards of 1,500 to 4,000 claims per day and that could hit 4,000 to 5,000 (per day) if there’s a bad weather event,” Hoppe estimated.
A European discount airline currently using iCAN has reduced its claims processing time by 50 per cent and its claims-related staffing requirements by 30 per cent, he noted. At that particular airline, “that translates into about 10 to 15 fewer people required with this (claims procedure) than usual,” he said.
The European carrier (which chooses to remain anonymous for now, Hoppe said) is Intelenet’s only iCAN customer so far. Air Canada, WestJet, Porter Airlines and the Air Transport Association of Canada, which represents commercial passenger carriers in Canada, declined to comment for this story.
Despite the potential business benefits of a tool like iCAN, Lukacs doesn’t believe Canadian airlines will rush to invest in AI solutions. Unlike Europe, Canada still has no clear legislation around passenger rights, he said, so there is no legal pressure on airlines to compensate customers quickly, if at all.
“Currently, (AI-based) technology, even if it’s great, is not needed by airlines in Canada because they can simply say no, we’re not paying claims,” Lukacs said.
Secondly, Lukacs said there’s no financial incentive for airlines to invest in new AI tools because current claims methods are less expensive than buying technology.
“What is cheaper? It’s cheaper to hire someone in India to send out polite emails telling passengers to get lost.”
A federal passenger bill of rights law was proposed in 2009 and again in 2013 but was never passed, Lukacs said.
At present, customers must seek recourse with their airline first before filing a complaint with the Canadian Transportation Agency (CTA). There were 595 complaints filed with the CTA over flight disruptions in 2015-16, more than twice the 226 filed in 2011-12.