Airlines Tackle $1.4 Billion Online Fraud Challenge

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.

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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.

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