For the aviation industry, a loyalty program is very valuable. FSC Full-Service Carriers and ancillary-driven LCC Low-Cost Carriers cultivates a very strong relationship with their Elite, Premium, or Frequent Flyers. Rewarding loyalty means getting access to special discounts on flights, upgrades, ancillaries, and shopping cards. Their points can be redeemed, transferred, and sometimes sold, making them a liquid and so far, unregulated kind of digital currency. Banks, credit cards, and partner carriers make use of these incentives to build a long-lasting relationship with the most preferred customers. It is a very attractive market for carriers, as well as a very attractive attack landscape for fraudsters willing to make illegal money out of it. Sometimes, even attractive for organized crime-related money laundering schemes.
The banking industry is a very well-known landscape where fraudsters operate to gain illicit funds, but also to conceal the origins of those (money laundering). The most common of these frauds are the result of phishing campaigns to gain access to a customer’s authentication credentials (ATO or Account Takeover). The fraudsters then access their victim’s accounts to make unauthorized transfers to crime related accounts, usually created with AI generated synthetic identities (NAF New Account Fraud). Additionally, sophisticated fraudsters design social engineering campaigns to deceive legitimate account owners to transfer funds to a fraudster impersonating a legitimate business (SCAMs). Presently, fraudsters are “innovating” by bringing this crime expertise to the aviation industry, and especially to loyalty programs because of their resemblance to the payment, the transfer, and the credit card operations domains.
Fraudsters are not the only ones adopting cross domain innovation. The aviation industry is also adopting this same financial crime landscape classification and protection for their own loyalty programs. That’s the reason why Loyalty Account Takeover, New Loyalty Account Fraud, and Loyalty Program SCAMs are resonating these days as top priority problems to solve. Luckily, the banking industry can also provide cross domain knowledge and innovation to the aviation industry. Know Your Customer, or Know Your Passenger, or Know Your Elite are becoming well understood ways to fight these kinds of frauds. For instance, the Ready to Travel product adopting remote Identity Verification to automate the admissibility and eligibility of passengers is now a core component of a broader Know Your Loyalty, implementing behavioural biometrics to protect against Loyalty Account Takeover, injection attack detection (deepfake detection) to protect against New Loyalty Account Fraud, or Loyalty (mule) Account Classification to pre-empt their loyalty account owners from becoming targets of loyalty points SCAMs.
Loyalty programs with this attack surface are also places where organized crime can find an infrastructure for money laundering. That’s the reason for adopting transaction monitoring to spot suspicious loyalty transactions, or suspicious loyalty account schemes that might be using a carrier loyalty program to conceal the origin of their illicit activity. So far, unlike the banking industry, the aviation industry does not have to be compliant with strict regulations to protect the interests of the customers, or to help the authorities to prosecute illicit activities. Their interest is more related to providing digital trust, or loyalty trust to their programs, and therefore unlocking marginal revenues derived from their programs and from their ancillaries, and stopping revenue leakage derived from the activity of fraudsters and organized crime. Nevertheless, there are some initiatives to provide guidelines and best practices to adopt all these protective and pre-emptive measures and technologies. IATA plays a significant role in building this.
Finally, let’s elevate the abstraction level of the security landscape: the digital infrastructure. Now, the target is to protect the whole infrastructure from the attack of fraudsters, i.e. its platform or its orchestration depending on how it is deployed. Loyalty programs operate in the context of Agentic Commerce and Online Commerce. They are also connected with the identity and payment layers. All of them are the fundamental component of the Loyalty Trust Framework operating under the carrier’s ownership and governance. Cybersecurity and cyber threat intelligence at platform and orchestration level becomes a must have, while white box security provides transparency, data consortiums provides collective and actionable cyber intelligence, both at the core (signal or pattern sharing), and at the edge (strategic divergence).
The aviation industry is adopting a banking industry mindset when thinking about protecting loyalty programs. The most visible adoption occurs at the identity and the payment level. Additionally, at the platform or the orchestration level, cybersecurity teams are adopting countermeasures driven by collective intelligence to fight against organized fraudsters. The next step would be to adopt protection and pre-emption level at account, and wallet (or device) level, because the future adoption of Agentic Commerce will rely on autonomous transactions and verifiable credentials presented at the edge. Adopting this holistic mindset will unlock those marginal ancillaries that make the difference in operational results in a context of reduced margins and will contain revenue leakage derived from fraud and from an underleveraged Elite, Premium, or Frequent Flyer experience. The Loyalty Trust Framework is perfectly suited to drive this future.
The business case for carriers
Elite and Frequent Fly experience: No more trade-off between convenience and security
Today’s security technology is “invisible” and seamless. Behavioural biometric is passive. The passenger experience is not affected by any additional friction. With passive behavioural biometric and continuous authentication technologies, convenience over security is no longer a trade-off.
ROI analysis: Short term payback
The technologies described to protect your loyalty program are the same used for evaluating the passenger’s eligibility, i.e. Ready to Travel, the same used for passenger authentication at airport checkpoints, i.e. Seamless Travel, and share the same underlying technology used for Agentic Identity and Payments. Altogether, the combined return of investment payback for a carrier is less than 6 months.
Data Consortiums: Competing at the edge, and cooperating at the core
Cooperation can happen at the core while carriers share aggregated signals and events, or patterns of attacks and defence. The loyalty account’s identity attributes and segmentation ownership and agency is kept at the edge by the carrier. Strategic diversification can still happen while collective intelligence helps to secure the whole ecosystem. Competition and Cooperation are not rivalling but complementing.
Regulatory landscape: Innovation advantage
Open Banking experience shows that a less regulated landscape makes it the best place for adopting innovative ways to leverage on the existing passenger’s segmentation and transactional data. The aviation industry can adopt this technology in an innovative and agile way. It can make it at different flavours of technology adoption, making this a way to customise their loyalty program experience.
