News

Airline fraud costs £300m a year - 26 Apr 2007

(26 April 2007)

Fraud costs the world's airlines more than £300 million a year and has grown five-fold since 2000, yet 65% of carriers have no anti-fraud measures.

A report by accountancy giant Deloitte and the International Association of Airline Internal Auditors put the average airline's losses at £1.5 million a year.

Low-cost carriers suffered more than three timesas many frauds as traditional carriers, although average losses to theno-frills carriers were only 22% higher.

The findings follow a survey of 180 airlines, which reported frauds involving counterfeit and stolen tickets, false baggage claims and abuse of frequent flyer schemes.

But by far the greatest losses (60%) came from card fraud, with European airlines the worst affected.

One in five carriers also reported internal abuse of passenger details and 7% admitted employees had stolen passenger identities.

The survey found 72% of airlines have no policy on fraud, 63% no whistle-blowing mechanism for staff and 61% no formal system to track fraud.

The findings are based on reports by carriers' internal auditors, of whom two-thirds thought the rise of online sales lay behind the fraud increase.

Deloitte enterprise risk services director Mike Maddison said: "Airlines must ensure websites meet security standards."

The consultancy's aviation and transport lead partner Graham Pickett added: "Technology has done so much to help airlines cut costs but the processes that should detect and track fraud are not comprehensive enough."