Online payment fraud is a big issue for the airline industry, as airlines report over USD 1 billion annually in online fraud losses, a study indicates.

The study also underlines the need for more regulations and highly sophisticated fraud detection tools, as part of new strategies which are indispensable to travel services industry's success. Most airlines have not implemented sufficient rules and defense mechanisms in order to manage fraud-related risks. Thus, more than half of the airlines reported less than 26 fraud rules which their existing fraud detection systems take into consideration when evaluating online transaction risks. Over 30 percent of the airlines mentioned that up to 5 percent of reservations are made from a mobile device or game console, while 8 percent of respondents indicate that up to 20 percent of transactions are made from these devices.

As far as online payment methods are concerned, 6 percent of the airlines have expressed their preference for alternative payment options, including eBillMe, BillMeLater, PayPal and Google Checkout over debit or credit cards.

According to CyberSource, a provider of electronic payment services, airline operators worldwide lost over USD 1.4 billion to online fraudsters in 2008, representing 1.3 percent of global airlines' online revenue.

The study was conducted by 41st Parameter, a US provider of internet fraud intervention and detection services.