3 Reasons Airline CIOs Should Automate Fraud Review

3 Reasons Airline CIOs Should Automate Fraud Review

At the virtual World Aviation Festival hosted in September, Air Canada’s CIO, Catherine Luelo, said new technologies are at the forefront of the carrier’s recovery strategy. “Out of great crises comes great innovation,” she said. This makes sense. With limited resources, airlines were forced to take a serious look at the tools and assets they’ve invested in and find innovative ways to boost their effectiveness. And with demand still on the recovery, airlines could use the downtime to address issues that couldn’t be prioritized during peak business. Specifically, CIO’s like Luelo took this opportunity to transform digital processes in order to better manage the crisis and set up for a smooth return post-COVID-19.

But if CIOs don’t take fraud management into consideration, they can jeopardize the success of digital transformation efforts. In this blog post, I’ll explain why automating fraud review should be part of an effective business strategy to optimize airline revenue.

1. Cutting operational costs 

Airlines operate in such a complex and vast network, that many CIOs are constantly working to improve underlying infrastructure. Now, with staff reductions, cash-flow shortages, and budget cuts, the pressure to leverage technology to minimize losses is more critical than ever. One direct way to reduce operational bottlenecks is automating fraud review. 

Switching to an automated review system means freeing up resources devoted to analyst teams – Riskified worked with a leading ground-transportation merchant, who, after integration, moved the majority of their analysts into other positions that needed to be filled. Another merchant we work with told us that they were able to cut hiring costs by 10%, because of increased operational efficiency from automating fraud review. In addition, because ML-based solutions deliver higher accuracy than manual analysis, airlines can expect fewer false declines, which will have a direct impact on customer service needs.

2. Instant order confirmation

In today’s eCommerce world, ‘instant’ is king, and customers expect the same when it comes to travel. If airlines depend on a manual review team to screen risky orders before approving them, customers can end up waiting hours before they receive a confirmation email. If the customer, having already waited for confirmation, learns that their order was declined, their frustration will be even greater. Airlines also tend to enforce high-friction verification measures, like 3DS, which vitiate the user experience. And the problem is aggravated even more when coupled with slow processing times. Airlines operate in a fiercely competitive environment, and while pricing is, unsurprisingly, a major factor, a convenient and seamless online experience carries its own weight. In fact, 80% of shoppers are willing to pay more for a better customer experience. But balancing fraud-prevention and a frictionless customer journey is no small feat.

Online travel tickets are commonly targeted by fraudsters. Although there are plenty of measures to protect against losses, they often come at the cost of a smooth customer experience, so merchants end up losing good shoppers along the way. CIOs need to leverage technology that can guarantee accuracy and fast response times, which are both critical in the travel space. Approving legitimate orders becomes easier when partnering with a fraud prevention solution that can review huge swaths of data in real-time. ML-based systems can leverage behavioral analytics and rely on an extensive network of cross-industry data-linking to instantly approve good customers.

3. Protecting your bottom-line

Under COVID-19, airlines took a hard hit not only due to travel restrictions and the halt in global tourism, but also from friendly fraud. Many customers acted to cancel travel plans by any means necessary. And with customer support teams working from home and overwhelmed with claims, some shoppers opted to dispute their purchases with their bank to get their money back quickly. These illegitimate chargebacks eat into airlines revenue during already trying times. 

Our research shows that around 50% of fraud chargebacks for Riskified Chargeback Guarantee merchants contain indicators of chargeback abuse. Disputing these chargebacks is costly for airlines, as each case takes time and resources to resolve. Stopping chargeback abuse requires the ability to unmask the real identity behind an order. And airlines need to manage this process at scale since these incidents are often not a one-time occurrence. By fighting and winning liar buyer chargebacks, we discourage repeat offenders. We automatically select clear cases of abuse, so CIOs can free up valuable resources and protect their brand.

Conclusion

The digital landscape means that everything from ticketing, to loyalty programs and mobile apps must be synced. When airlines fall short, customers are quick to take to social media and voice their complaints. Now, add in fraud, false declines, and friction, and problems are quickly amplified. Effective fraud management has the ability to improve everything from customer experience to operations, but CIOs need to prioritize technology to make their IT systems more resilient. To learn more about how automating fraud review can help senior management protect their revenue, contact sales@riskified.com.