Flight delay insurance offered for first time

With complaints about flight delays on the increase, Shanghai Spring Airlines - a budget airlines - and the Shanghai-based Dazhong Insurance Company Limited are offering flight delay insurance for the first time in China.

When booking tickets on the Spring Airlines website, passengers can now choose to buy flight delay insurance at 20 yuan ($3) per flight.

The insurance company will pay 200 yuan ($31) in compensation to each insured passenger if the flight is delayed for at least three hours for bad weather, mechanical problems or air traffic problems.

If the flight is delayed for six hours, the payout will be 400 yuan, and if the flight is cancelled, the insured passenger will 300 yuan.

All compensation will be processed automatically, according to Ross Matthews, general manager of Dazhong Insurance

"The flight delay and cancellation insurance policy does not rely on any written documents," he said.

A text message will be sent to passengers, he added.

Wang Zhenghua, chairman of Spring Airlines, said his company made a seven-day dry run on the company's official website starting April 1. Some 12,000 passengers, about 15 percent of those booking tickets, bought the insurance, Wang said.

Of those, 27 passengers received flight delay compensation totaling 5,400 yuan, he said.

Nine passengers received flight cancellation compensation amounting to 2,700 yuan, he added.

Zhang Yueran, a Hong Kong-based insurance actuary, said: "If the airlines has a low number of delayed flights, they will make money on this."

For Ningbo-based marketing specialist Li Chunchun, who travels frequently, the insurance is not helpful for the meetings that she cannot afford to miss.

But if it is a personal trip, she would very much like to buy the insurance, Li said.

According a 2011 report by China Consumers' Association and Civil Aviation Administration of China (CAAC) some 76.5 percent of the 6,000 airline passengers surveyed have come across flight delays.

Some 51.7 percent indicated that bad weather was the mostly frequently cited reason for flight delays.

Only 6.5 percent received any compensation for flight delays. Of those, 38.4 percent received compensation from the airline, 47.5 percent received compensation after negotiations with the airline and 8.1 percent were compensated after they complained to CAAC.