Airlines Tackle $1.4 Billion Online Fraud Challenge

Tue Mar 17, 2009 2:00am EDT
 
[-] Text [+]
Profit protection is key in tough economic environment; Business airlines see
lowest fraud losses

MOUNTAIN VIEW, Calif., March 17 /PRNewswire-FirstCall/ -- New survey findings
released today show airlines worldwide lost over $1.4 billion to online
fraudsters in 2008, about 1.3% of worldwide airlines' online revenue. The data
comes from a new independent Airline Online Fraud Survey commissioned by
CyberSource Corporation (Nasdaq: CYBS) in association with Airline Information
LLC and completed January, 2009. 

(Logo: http://www.newscom.com/cgi-bin/prnh/19990513/CYBRSOURCELOGO)

Airlines are on the front line of the battle against online fraud--33% of the
industry's revenues derive 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 survey data, the ways airlines manage fraud vary significantly by
airline category.  In 2008, business-class airlines, with higher-priced
tickets to protect, typically embraced profit protection measures, whereas
low-cost carriers tended to focus 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 organization. "Improving
the efficiency of fraud management is one of the quickest cost-cutting moves
airlines have at their disposal." 

Fraud management tactics vary widely by region. North American-based companies
relied far more heavily 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 realize these benefits in a matter of weeks--not
years." 

To see the full survey -- for journalists: please call or email any of the
contacts listed below.   For all others: please visit 
http://forms.cybersource.com/forms/airlinefraudpr

The Airline Online Fraud Survey was commissioned by CyberSource Corporation.
The data was compiled in an online survey conducted by Mindwave Research in
the U.S., and additional phone follow-ups were conducted by Vanson Bourne Ltd.
in the U.K. The surveys were fielded December 1, 2008 through January 16, 2009
and yielded 99 qualified and complete responses.   Incentive to respondents
included a summary of the research. 
 
About CyberSource
 
CyberSource Corporation is a leading provider of electronic payment and risk
management solutions. CyberSource solutions enable electronic payment
processing for Web, call center, and POS environments.  CyberSource also
offers industry leading risk management solutions for merchants accepting
card-not-present transactions. CyberSource Professional Services designs,
integrates, and optimizes commerce transaction processing systems.
Approximately 253,000 businesses use CyberSource solutions, including half the
companies comprising the Dow Jones Industrial Average. The company is
headquartered in Mountain View, California, and has sales and service offices
in Japan, the United Kingdom, and other locations in the United States
including Bellevue, Washington and American Fork, Utah. For more information
on CyberSource please visit www.cybersource.com or email info@cybersource.com.
 For more information on Authorize.Net small business solutions, please visit
www.authorize.net or email sales@authorize.net. 

(C)2009 CyberSource Corporation. All rights reserved. CyberSource is a
registered trademark in the U.S. and other countries. All other brands and
product names are trademarks or registered trademarks of their respective
companies.




SOURCE  CyberSource Corporation

(UK) Danielle Cook, +44 (0)1628-628-080, daniellec@noiseworks.com; or (US)
Bruce Frymire, +1-650-965-6042, bfrymire@cybersource.com; or (India) Wayne
Ferrao of Blue Lotus Communications, 66522890-899, wayne@bluelotuspr.com

 

Featured Broker sponsored link

Editor's Choice

A selection of our best photos from the past 24 hours.  Slideshow 

Most Popular on Reuters

  • Articles
  • Video