Rising Regulatory Pressure and Claims Filing Services: Why Airlines Need to Rethink Claims Processing
The airline industry is under increasing pressure from both regulators and third-party claims filing services to speed up claims processing and improve customer service. This new landscape is forcing airlines to rethink their operational strategies and invest in solutions that help them meet evolving requirements and stay competitive.
New Regulations: Airlines Must Comply or Face Penalties
In the U.S., the Department of Transportation (DOT) has introduced a series of new regulations that mandate automatic refunds for flight cancellations, significant delays, or services that were not provided as promised. Under these rules, airlines are now required to issue refunds without passengers needing to actively request them. This includes refunds for significant changes to departure or arrival times (3 hours for domestic flights and 6 hours for international flights), refunds for delayed baggage, and even automatic refunds when flights are canceled or diverted to a different airport. These changes are set to take effect in late 2024, pushing airlines to overhaul their claims handling processes to avoid penalties and keep pace with these new requirements (US Department of Transportation, 2024).
Across the Atlantic, the European Union’s Regulation 261/2004 already imposes strict compensation requirements for delays and cancellations, but these rules are being expanded to include stricter definitions of “extraordinary circumstances,” further limiting the scenarios in which airlines can avoid compensating passengers. Airlines operating into Europe, regardless of their origin, must adhere to these rules, making compliance a global challenge for many carriers (Clyde & Co, 2024).
The Growing Influence of Claims Filing Services
Compounding the pressure from regulators are third-party claims filing services such as AirHelp and Flightright that have become increasingly popular in recent years. Their promise of making compensation claims easier and more transparent has led to a 30% annual increase in their customer base since 2019. This surge in popularity has resulted in a dramatic increase in claims submissions, causing airlines to experience a 15-20% rise in backlog year-over-year, which has further intensified the need for airlines to streamline their claims processes and improve response times.
The Impact of an Educated Customer Base
Passenger awareness of their rights has risen significantly in recent years. A 2024 Eurobarometer survey found that 35% of passengers were aware of their air travel rights, a 13% increase since 2019. Despite this, 84% of respondents still felt they lacked adequate information on how to exercise these rights, suggesting that airlines have room to improve communication and transparency(Mobility and Transport).
This rise in awareness has led to a 40% increase in compensation claims within the EU alone between 2020 and 2023. In Canada, a similar trend has emerged, with over 50,000 passenger complaints backlogged, prompting the government to review regulations and strengthen enforcement(PIRG).
How SnapIQ Can Help Airlines Stay Compliant and Reduce Backlogs
Given these evolving challenges, airlines must adopt innovative solutions to streamline and accelerate claims management, and ensure compliance with regulations. This is where SnapIQ’s AI-powered claims management solution comes in.
SnapIQ automates the entire claims handling process, from categorizing claims to issuing compensation and providing notifications—all while staying up-to-date with the latest regulatory requirements. By using AI to manage claims, airlines can reduce processing costs dramatically, reduce errors, and ensure that refunds and compensations are issued accurately and promptly. This not only helps airlines avoid fines and maintain compliance but also lessens the appeal of third-party claims services for passengers.
The Road Ahead: Staying Ahead of Regulatory and Competitive Pressures
With the introduction of new regulations and the growing influence of claims filing services, airlines need to rethink how they handle customer claims and compensations. Investing in AI-driven solutions like SnapIQ can help airlines stay compliant, improve customer satisfaction, and reduce operational costs—ultimately turning what used to be a headache into a competitive advantage.
For airlines looking to navigate these turbulent times, the choice is clear: Adapt and invest in smarter claims processing, or risk falling behind in an increasingly regulated and competitive market.
Get in touch with our team to explore how SnapIQ can help your airline.