Airlines lost $1.4 Billion as a result of online fraud

The survey commissioned by Mountain View, Calif.-based CyberSource Corp. and Airline Information LLC, producer of conferences and publications about commercial aviation, showed that in 2008 airlines lost more than $1.4 billion to online fraudsters, which makes about 1.3% of their Web-generated revenues.

One of the most popular frauds related to the online airline purchase was determined to be when a fraudster buys a ticket in the name of another person using the information from a stolen card, and then sells the ticket with a discount to another person.

Moreover, the survey showed that airline fraud often involves the cardholder not traveling, international, single-passenger and one-way travel deals.

The average revenue loss rate on airline Web sites made 1.3%. Carriers with the least experience in selling tickets online had higher fraud rates, as well as, carriers catering more to low-fare leisure travelers, rather than to full-fare and business travelers. Moreover, it was revealed that 30% of online bookings required additional manual review and verification. On average carriers used 5.8 fraud-detection tools. 

Another data found as a result of the survey was that airlines reject 2.8% of their online bookings on average. 

Results are based on online surveys of airline executives with fraud-control responsibilities and follow-up phone interviews conducted between Dec. 1 and Jan. 16 that resulted in 99 qualified responses. Carriers participating in the survey ranged from large to small companies all around the world. Participating carriers had combined online sales of $40 billion last year, about 25% of the industry’s online total.