STARTUP STAGE: Colibra pays for flight delays and cancellations

Colibra

Founded in early 2019, Colibra guarantees payouts to passengers whose flights are cancelled or delayed by at least one hour.

Colibra processes claims under Europe's flight compensation rule, which covers all flights within and originating from Europe. 

What is your 30-second pitch to investors?

Colibra is a free travel app that pays every time a passenger’s flight gets cancelled or delayed by one hour or more, no matter the reason, without asking for an upfront payment. This is in contrast to the standard flight refund policy that only compensates passengers delayed for at least three hours and where the delay is the fault of the airline. Users add their flights prior to take-off and get real-time flight information about gate/terminal changes and time delays. They choose a payout and agree to share their right for compensation under the European flight compensation regulation EC 261/2004 with the community, in order to get paid 30 times more often. Any delay compensation is paid within 24 hours of the delay.

Describe both the business and technology aspects of your startup.

Colibra’s flight compensation product has a simple business case behind it - how to offer a service that guarantees instant monetary compensation for every flight delay of at least one hour or cancellation, regardless of the reason. This idea is in complete contrast to the standard EC 261 compensation used by airlines, which only conditionally offers a payout where passengers are delayed for three hours or longer and where the airline is faulty.

Our product is a major innovation in the world of flight-compensation as it offers instant, guaranteed cash, unlike any other competitor. The app spares users going through the process of filing their own claim with the air carrier, presenting numerous documents, proving the disruption was the airline’s fault and waiting indefinitely to potentially receive money.

Due to the fact that Colibra covers any flight delay of 60 minutes or more, regardless of the reason (bad weather, strikes, technical problems, etc.), a frequent traveler who uses the app receives money on average 30 times more often compared to a passenger relying on the 261 Regulation.

Using Colibra's service, the passenger agrees to share their potential right to receive compensations for three-plus hours flight delays so they can get paid for flights no airline would compensate (the one- to three-hour delays). In the event of a delay of three or more hours, Colibra collects the amount due from the airline, takes the market-average fee and redistributes the rest among all Colibra members with at least one-hour delays or cancellations.

Give us your SWOT (Strengths, Weaknesses, Opportunities, Threats) analysis of the company.

A major strength of Colibra’s service is that it is the easiest and fastest way to get compensated for flight delays and cancellations up to 30 times more often, no upfront costs included. One weakness can be considered as the fact that if your flight delays more than three hours you may receive a smaller amount than the one stipulated by the Regulation because it is being redistributed to all users of Colibra. However, that’s only an impression - the ongoing compensation customers get when frequently flying with us is the same value in the long-term, in some cases even more.

Currently, an opportunity for Colibra is to offer a unified user experience when flying by combining all elements of the flight process - including purchasing flight tickets with flight delay insurance, providing auto check-in, incorporating boarding pass wallet and receiving real-time data about flight changes. The second wave of COVID-19 can be definitely seen as a massive threat due to the decreasing demand in the travel segment and the changing face of air travel.

What are the travel pain points you are trying to alleviate from both the customer and the industry perspective?

The biggest problem we solve for travelers is the uncertainty of getting compensated. In the majority of instances when a flight is delayed by three hours or longer, it is not the airline who is at fault. Not knowing their rights, customers go to look for compensation only to find out months later that such is not due. Moreover, the lack of compensation for shorter delays is also something that negatively impacts passengers. That’s why we designed our service to be easier, faster and to pay more often than airlines and compensation brokers. Most importantly our goal is to provide customers with a guarantee they will get what is theirs.

So you've got the product, now how will you get lots of customers?

Colibra already has more than 100,000 users from more than 170 countries. Our acquisition strategy predominantly relies on direct ads, referrals, affiliate partnerships and PR. We’re constantly looking for new business opportunities to integrate Colibra’s services into existing solutions and thus offer additional value to companies willing to partner with us.

Tell us what process you've gone through to establish a genuine need for your company and the size of the addressable market.

We interviewed many prospective customers who fly often and asked them whether they would share their potential right of receiving compensation under EC 261 in exchange of guaranteed money that they’d receive more often and without a hassle. The majority said “yes” right away. Given that the yearly flight compensation market is estimated at $8 billion and the fact that a big percentage of it is not claimed at all due to no knowledge of air passenger rights or the lengthy process of getting paid, we knew that we were onto something.

How and when will you make money?

Colibra’s business model works similar to insurance with the main difference being that in our case people “pay” with their potential right to receive compensation. Let’s say 1,000 flyers pool in their potential right to receive compensation under EU261; 100 of them experience delays of more than one hour; 10 experience a flight delay greater than three hours and might be eligible for compensation from the airline. Colibra will pay 2,000 Euro of its own money to all 100 passengers that had a delayed flight of more than one hour, which is on average 20 Euro per person, transferred up to 24 hours after their flight.

After all passengers have received their compensations, Colibra will file these 10 claims that are possibly due compensation in bulk and in several months will likely receive around 2500 Euro from the airlines. The difference of 500 Euro will be the gross profit Colibra makes.

What are the backgrounds and previous achievements of the founding team?

Colibra’s team has successful founders across the finance, insurance, pharmaceutical and IT industries. Most of them have successful businesses grossing more than $10 million in yearly revenues, some of them have been part of the technical and product teams of mobile apps with 100 million downloads, while others have extensive marketing experience and millions of acquired users under their marketing belt.

How have you addressed diversity and inclusion within your business?

We have committed to recruit a diverse workforce and have a large pool of applicants to choose from, naturally allowing us to recruit qualified candidates from across different backgrounds. We employ people across various diverse groups regardless of their age, sex, race or sexual orientation. Key factors in our recruitment process have always been performance and motivation.

What's been the most difficult part of founding the business so far?

The most difficult part so far has been the COVID-19 crisis, which severely impacted our strategy and processes, and we had to adapt to the crashing demand for travel literally overnight. We immediately cut operational costs, reorganized processes, replanned our roadmap and began talking to customers so we better understand what stands on the top of their needs. That’s how we got to our next product, which will solve one of the biggest pains of passengers in those uncertain times.

Generally, travel startups face a fairly tough time making an impact - so why are you going to be one of the lucky ones?

Our next product will solve a great current need in the market, and we’ve found a clever way to tie it to our existing services. We think that the customer behavior and needs have shifted towards more “guarantees” when flying, which we will be able to provide first.

A year from now, what state do you think your startup will be in?

We believe we would have helped more than one million flyers across the globe and closed a new round of funding. But before that, we will keep polishing the product and adding more exciting features to the app, aiming to win the hearts of European users who will use Colibra as a self-evident every-day tool for their trips.

What is your end-game? (Going public, acquisition, growing and staying private, etc.)

So far our plans are to continue to grow and stay private, and to keep offering a service which puts our users and their rights first.