New study findings released today show airlines worldwide lost more than $1.4 billion to online fraudsters during the last year (2008), about 1.3% of worldwide airlines’ online revenue.

The facts comes from a new independent Airline Online Fraud Survey commissioned by CyberSource Corporation in collaboration with Airline Information LLC and completed January, 2009.

Airlines are on the forefront of the clash against online fraud—33% of the industry’s income come from eCommerce, three times the proportion of sales transacted online by non-travel companies—so efficient management of the problem is of critical concern to the airlines.

According to review figures, the ways airlines manage scam vary considerably by airline group.

In 2008, business-class airlines, with higher-priced tickets to defend, typically embraced profit protection measures, whereas low-cost carriers tended to concentrate on revenue capture.

On average, business airlines used the most fraud detection tools (6.5 tools per business-class airline), had the highest rate of manual review (47%), and rejected more bookings due to suspicion of fraud (3.6%). Conversely, low-cost carriers used the least number of automated screening tools (4.9 tools per low-cost carrier), were less likely to manually review bookings (13%), and rejected fewer bookings due to suspicion of fraud (2%). The result of these differing strategies is that in 2008 business airlines lost 1.1% of their revenues to fraud and low-cost carriers, by contrast, lost 1.6%.

“The good news is that solutions exist,” said Christopher Staab, Managing Partner of Airline Information, an airline industry organisation. “Improving the efficiency of fraud management is one of the quickest cost-cutting moves airlines have at their disposal.”

Fraud management ways differ widely by region. North American-based companies relied far more greatly on detection tools, employing an average of 7.5 tools vs. a European average of 5.4—the overall world average is 5.8.

North American airlines manually reviewed only 3% of their bookings whereas Middle Eastern-based airlines manually reviewed 81%. European and Asia Pacific-based airlines manually reviewed 22% and 49% of their bookings respectively.   

According to Dr. Akif Khan, CyberSource Head of Client and Technical Services in the UK, “These findings highlight the need for airlines to adopt a more automated, holistic approach to fraud management—from initial screening through booking review and disposition. Improving the accuracy of automated screening is key. In doing so, they can reduce overhead costs associated with manual review, as well as improve revenue capture and lower fraud loss. With the right tools, airlines can realise these benefits in a matter of weeks--not years.”