1.
Cancellation Insurance?
Pedro Écija Serrano ¦ www.datadriven.ie ¦ pedroecija@datadriven.ie

2.
Cancellation Insurance?
Who looks after you when your flight is cancelled?

3.
Cancellation Insurance?
http://on.ft.com/2wDdFl1
http://bit.ly/2w4gmfN
http://on.ft.com/2wDdFl1

4.
Cancellation Insurance
Mr Passenger
Travel
Insurance
Liability
Insurance
Business
Interruption
Insurance
Liability of
Air Carriers
Who looks after the airlines when there is flight disruption?

5.
Cancellation Insurance?
•Travel Insurance: paying only after other avenues of
compensation have been exhausted and might not cover Acts of
God.
•Airline Liability Insurance: there must be bodily injury or death
and/ or property damage.and/ or property damage.
•Business Interruption Insurance: expensive and likely to require
property damage to warrant compensation. Terms exclude many
claims.
•Liability of Air Carriers: airlines are not expected to compensate
only under exceptional circumstances according to EU legislation.

6.
Cancellation Insurance?
•Travel Insurance: paying only after other avenues of
compensation have been exhausted and might not cover Acts of
God.
•Airline Liability Insurance: there must be bodily injury or death
and/ or property damage.
And The Winner Is…
and/ or property damage.
•Business Interruption Insurance: expensive and likely to require
property damage to warrant compensation. Terms exclude many
claims.
•Liability of Air Carriers: airlines are not expected to compensate
only under exceptional circumstances according to EU legislation.

7.
Cancellation Insurance?
https://www.rte.ie/news/business/2017/0615/882987-ba-disruption-costs/
https://www.linkedin.com/pulse/cyber-payout-ba-failure-zoe-campbell

8.
Cancellation Insurance?
https://www.theguardian.com/business/2010/apr/16/iceland-volcano-airline-industry-iata
https://www.theguardian.com/business/2010/jul/28/easy-jet-puts-volcano-costs-at-65m
https://www.theguardian.com/business/2010/apr/19/ba-volcanic-ash-losing-money

9.
Cancellation Insurance?
http://bit.ly/2uiK8zr
https://www.theguardian.com/business/2017/jun/06/european-commission-plan-tackle-air-traffic-control-strikes

10.
Cancellation Insurance?
•Airlines are usually on their own but does it
have to be that way?
•Could we insure the cancellation of a flight?•Could we insure the cancellation of a flight?
•How much would that cost?
•Is there anything else we can do about it?

11.
Cancellation Insurance?
Based on US flights data:
93% of routes have cancellation
rates below 1%.
–1.4% average cancellation rate
including all flights.
–The least reliable routes have an–The least reliable routes have an
average 3.6% cancellation rate.

12.
Cancellation Insurance?
Some routes are more prone to cancellations than others but there might also be an
airport effect. It could simply be a result of there being many routes in that location.

13.
Cancellation Insurance?

14.
Cancellation Insurance?
Let’s take an A320 plane and EU compensation rules:
–180 passengers
–Compensation between €250 and €600
The risk premium (100% of the risk) would be between:The risk premium (100% of the risk) would be between:
–€315 for reliable flights and €250 compensation p.p.
–€3,890 for the most cancelling flights and €600 compensation p.p.
On a per passenger basis, between €1.75 and €21.6
Profit loading, expenses and other margins would need to
be added too.

15.
Cancellation Insurance?
What else could be done?
If cancellations are airport driven, rather than route
dependant, an assistance service located on
cancellation prone airports might be viable.

16.
Cancellation Insurance?
•Insure entire flights for airlines,
compensating for a portion of the incurred
losses.
•Use data science to its full potential, as
retail regulation would not apply (i.e.: no
gender directive, etc)
•Provide complementary services to
Proportion of passengers
who would like to use
their smart phone to…
•Provide complementary services to
passengers such as:
•Real time flight information (delays,
cancellations)
•In situ support to stranded passengers
(information, food, drink, transport, etc)
http://bit.ly/P5ViiA

17.
Cancellation Insurance?
“You define a good flight by negatives: you
didn’t get hijacked, you didn’t crash, you didn’t
throw up, you weren’t late, you weren’tthrow up, you weren’t late, you weren’t
nauseated by the food. So you are grateful.”
Paul Theroux