The Internet, a convenience to travelers looking to quickly book a trip, is also a gateway to fraud, costing the airline industry tens of millions of dollars a year.
Now, some carriers are stepping up their efforts to fight back. They’re boosting the staff that tracks crimes and tapping into new technology that can help detect it. But as large airlines tackle the problem, there is growing concern that fraudsters are moving onto smaller carriers whose defenses are not yet in place.
“The fact is that any airline that hasn’t upgraded their fraud-protection system in the last couple years is a sitting duck,” says Jeff Liesendahl, CEO of Accertify, which provides fraud-prevention technology and services to airlines and other e-commerce companies.
Throughout the airline industry, online fraud is on the rise. A Deloitte UK survey taken in 2009 found that 48 percent of more than 50 responding U.S. and global carriers said online fraud had increased in the past year, and each airline’s losses averaged more than $2.4 million annually.
Other fraud experts say the amount is far greater. An industry poll released last year by CyberSource, an electronic payment security-management company, and aviation conference firm Airline Information estimated total losses at $1.4 billion in 2008.
“The general feedback from everybody … is that they see it getting worse,” says Graham Pickett, partner in charge of aviation services for Deloitte UK, which conducted its survey for the International Association of Airline Internal Auditors. “The main driver has been … the Internet, and in particular credit card type bookings.”
American Airlines and Virgin America have noticed an uptick. “We have seen an increase over the past year that is significant,” says Virgin America spokeswoman Abby Lunardini. Virgin officials “assume it’s a combination of the overall rise in online purchasing and the growing sophistication of those who engage…