FIT

1. F I T FIT It's still a problem! Doug Nass Dnass@ARCcorp.com Bob Stockman Rstockman@ARCcorp.com 703 816-8137

2. What is FIT? Tickets issued with one or more flight segments that are not meant to be flown; usually containing some form of obfuscation; and created for the purpose of substantially reducing the price of the ticket.

3. Does FIT include my carrier? Tickets plated on 74 different carriers 122 lifting carriers involved

4. How big is the FIT problem? ARC sent 2,072 tickets to carriers of potential Fraudulent Itinerary Tickets Other anomalies and manipulated fares not included in data

5. FIT Numbers Fare as Reported = $9,477,328 2,072 [$4,574 avg.] Additional as Re-fared = $588,386 155 cases [$3,796 avg.] Estimated Under Collection = $7,865,312 2,072 x $3,796 (avg.) Corrected Revenue = $17,342,640 $4,574 + $3,796 ($8,370) x 2,072 Self-generated discount for international / premium class tickets = 45%

6. FIT – On a Grand Scale

7. FIT clues Illogical Travel High Value International Travel First & Business Class Timing Diversion Multiple Carriers Multiple Tickets Open Segments (ARUNK) Favorite Cities to Manipulate Off-Plating

8. How is FIT changing? Long itinerary, false segment ticketing losing favor with fraudsters. Fraudulent ticketing less obvious. Increased use of mega-agencies as hosts for hiding activity and/or circumventing revocations. Increased use of agent or agency credit cards for travel by others. Decentralized to many fulfillment agencies. Smaller Losses Per Ticket? Off-shore ticketing?

9. 1st Part of Email Excerpt From: "Patricia Figueroa - Travelcraft" <patricia@travelcraft.com>Sent: Thursday, November 13, 2008 3:40 PMTo: tjmxxxxxx@thexxxxxxxx.comSubject: RV: [Fwd: XX Commission]Agent Rate Desk uses off-shore ticketing and delivers its profit via gaps in currency exchange rates. We take your PNR (Sabre or Amadeus only) and have it ticketed in the other country. Our tickets DO have the extra segment. The segment is at the end of the itinerary. It is NOT a connection to the true itinerary; it will be a future date and separate fare sector. You are welcome to cancel the extra segment after ticketing (except on CO). However, the extra segment will remain in the e-ticket.After ticketing the PNR is returned to you, so you are seldom without access to the PNR. For other GDS, we must build the PNR here. Almost all airlines can be ticketed. Commissions are based on airline, routing and ticket price. Because the profit is derived from the currency rather than the base fare, our commission rates apply to the entire ticket price including tax and surcharges. 6/6/2014 ARC PROPRIETARY AND CONFIDENTIAL. This document includes confidential information that is proprietary to Airlines Reporting Corporation (ARC). Disclosure of this document or any information contained herein to third parties is prohibited without the prior written consent of an authorized ARC officer. Obsolete versions of this document should be destroyed in a manner to prevent compromise of the information, e.g., shredding. 9

10. 2nd Part of Email Excerpt Our ticketing turnaround is usually less than one hour. We use only published fares, so all published fare privileges apply, including seating, upgrades, miles, etc.Refunds and changes are per the published fare rules with 2 exceptions:1) Fully unused tickets are refundable but partially used tickets can only be exchanged2) An exchanged ticket cannot be refundedThis program is not suited to companies being reimbursed by the federal government, due to the fed's requirement that reimbursements be for tickets issued in USA.For payment by check or bank wire, the commission can be pre-deducted. For payment by c.c., we send commission checks the following week.To release an Amadeus PNR you use the following format - cut and paste into your PNR:essyda82243-b,sfo1s2117-b,ccsv13801-b,ewr1s21dg-bSabre: 6@TA/T T 9 C - @=change key in Sabre 6/6/2014 ARC PROPRIETARY AND CONFIDENTIAL. This document includes confidential information that is proprietary to Airlines Reporting Corporation (ARC). Disclosure of this document or any information contained herein to third parties is prohibited without the prior written consent of an authorized ARC officer. Obsolete versions of this document should be destroyed in a manner to prevent compromise of the information, e.g., shredding. 10

11. 3rd Part of Email Excerpt Attached are forms that are required in order to issue tickets for you. There is a W9 and credit card verification and authorization forms. We realize that it is not always possible to get a copy of your clients credit card or their signature so we will accept your credit card information and signature as verification that you vouch for your clients.Please let us know if you need additional information. Thank you -Patricia FigueroaTravelcraftBCD Travel Affiliate63 El Pavo RealSan Rafael CA 94903 USA1800 258 0755 ext 121 or (415) 444-0767 ext 121(415) 444-0766 faxpatricia@travelcraft.com 6/6/2014 ARC PROPRIETARY AND CONFIDENTIAL. This document includes confidential information that is proprietary to Airlines Reporting Corporation (ARC). Disclosure of this document or any information contained herein to third parties is prohibited without the prior written consent of an authorized ARC officer. Obsolete versions of this document should be destroyed in a manner to prevent compromise of the information, e.g., shredding. 11

12. FIT - wire fraud!Fraudulent Itinerary Ticketing U.S. Federal Criminal Code, Title 18, Section 1343 Felony – Fine and up to 5 years sentence Elements: Scheme to defraud To obtain money or property Transmitted interstate electronically for the purpose of executing such scheme No minimum dollar amount required

13. FIT TRENDS Subtle fraudulent itinerary ticketing with fewer segments FIT reviews uncover other types of fraud In 2006, most fraudulent itinerary tickets had > 5 segments Today, most FIT has < 4 segments

14. FIT – a sample from previous years

15. FIT - Two Segment Outbound Only segment 1 was meant to be used.

16. FIT - Two Segment Return Only segment 1 was meant to be used.

17. FIT – efforts by ARC Scrub data Provide the information to the carrier. Seek feedback re proper fares, etc. Contact the agent - the problem of outside sales agents and “false” consolidators. Audits and Other Tactics

18. FIT WHERE ARE WE GOING.... Amending our FIT methodology from manipulated airport codes to IATA geographical zones/ sub-zones The Americas Europe and Africa Asia IATA ZONES

19. FIT - What can you do? Help document Fraud! What segments did the pax fly? What is the correct fare for the tkt as traveled? Was pax interviewed? Does pax FOP match tkt FOP? How much did pax pay? What was the intended itinerary? Was the validating carrier re-billed at proper fare? Has a DM been issued to agency? Has agency paid the DM? Save PNRs and pax contact information

20. What we want to accomplish Decrease losses due to fraud for ARC for Carriers for Travel Agencies Pressure Career Fraudsters Uncover other Frauds

21. FIT - wire fraud!Fraudulent Itinerary Ticketing U.S. Federal Criminal Code, Title 18, Section 1343 Felony – Fine and up to 5 years sentence Elements: Scheme to defraud To obtain money or property Transmitted interstate electronically for the purpose of executing such scheme No minimum dollar amount required

22. FIT - E-mail Disclaimer ARC FI&FP conducts periodic reviews of initial ticketing for indicators of irregular activities such as illogical itineraries or statistically abnormal origination or destination points. ARC cannot specifically establish what is occurring because it does not have access to PNR details, fare construction, or knowledge of the intent of the passenger. As a result, the following ticket data may be of interest to your carrier and should be considered for further review: ARC provides this service as a courtesy to its member carriers and makes no representations or warranties about the content, accuracy or relevancy of the data provided. ARC further makes no recommendations as to any action that should be taken.