Airline Fraud

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Fraud is defined as "any action, which deprives a carrier of the reveneu to which it is entitled, undertaken without the carrier's knowledge or consent." by IATA (International Air Trasportation Association) and the cost of fraud to the commercial aviation industry is estimated around 1,5 billion USD every year. This estimation comes from IATA Fraud Prevention Group's (FPSG) The Annual Fraud Loss Survey among airlines. Airline industry is a labor intensive service sector as much as capital intensive and mainly white collor workers are employed. In the industry computerized electronic systems are highly used. In order to produce an aviable seat for sales, there are many interconnected services are gathered such as resevation, ticketing, operations, passenger traffic, handling of passenger, baggage and cargo, catering, maintenance (MRO), training, fuelling etc. While airlines render many of those services on their own, some of the services are outsourced. Besides some of those services are sold to other airlines. Such a complicated working environment

and computerized electronic systems which are highly used in the industry attract fraudsters. Eventually fraud activities affect airlines' financial statements directly or indirectly. Frauds may take place in reveneu generating activities, expense accounts, ticketing, reservation activities, frequent flier activities, cargo and baggage activities, E-ticketing, Maintenence, Repair and Overhaul (MRO) activities etc. In this study, at first main fraudulent activities in airlines will be explained briefly, then fraud activities in the airline industry will be examined briefly considering The Results of the Airlines Fraud Survey 2000 made by IATA and IAAIA (International Association of Airline Internal Auditors)
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