Airlines lose €440m to fraud, survey finds

Fraud is costing airlines around the world about €2.2 million each in lost revenue, according to a new survey by Deloitte.

Fraud is costing airlines around the world about €2.2 million each in lost revenue, according to a new survey by Deloitte.

In total, the airline industry is believed to have lost €440 million through fraud last year.

This is about three times the level in 2000, when Deloitte last conducted this poll, reflecting the increase in the number of airline tickets bought via the internet.

A record 752 million passengers used international airline services last year.

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The biggest losses came from credit-card fraud, which accounted for an average €700,000 in losses to each airline.

Other areas of fraud identified were counterfeit or stolen tickets, cargo theft, false baggage claims, abuse of frequent flyer miles and cheques that bounced.

Low-cost airlines were the hardest hit, suffering more than 1,000 cases each a year, the survey found.

"Low-cost carriers were found to have the highest credit-card fraud losses, due in part to the high number of airline tickets they sell online," Deloitte said.

Ryanair, Europe's biggest low-cost carrier, said its losses from credit-card fraud in 2006 were "insignificant".

Aer Lingus said it had a system of fraud identification that involved both its revenue and corporate security departments.

"Credit-card fraud is the primary focus in this regard, particularly with Aer Lingus's high rate of online bookings," the airline said. "A comprehensive tracking and record system is in place and Aer Lingus pursues prosecution against those making fraudulent bookings."

One in five airlines admitted in the survey to cases of internal abuse of passenger details.

According to Deloitte, 7 per cent of airlines said its employees had stolen the identities of the airline's passengers.

Of equal concern is that 60 per cent of the airlines surveyed said they had no anti-fraud programme in place, did not perform frequent fraud risk-assessments and had no process to track or record fraud.

One in three airlines discover fraud "by accident", Deloitte said.

Ninety per cent of airlines expected fraud levels to either increase or stay at the same level in 2007.

Ciarán Hancock

Ciarán Hancock

Ciarán Hancock is Business Editor of The Irish Times