Airport Handling

UNIT 11 FARE CONSTRUCTIONS

Structure

11.0 Objectives
11.1 Introduction
11.2 Terminologies for Air Fare
11.3 Types of Journeys
11.4 Fare Basis
11.5 Steps of Fare Construction
11.6 Let Us Sum Up
11.7 Further Readings
11.8 Clues to Check Your Progress Exercises

11.0 OBJECTIVES
After going through this Unit you will be able to:
 understand the concept of Air Fares;
 comprehend the different definitions, terminologies and concepts of air fare
construction;
 identify the different types of fares; and
 understand the basic steps for air fare constructions

11.1 INTRODUCTION
An airfare (otherwise known as a fare) is the fee paid by a passenger for air transport
and is made up of the charge for a passenger to fly from an origin to destination and
includes the conditions, rules and restrictions for travelling on the airfare. Oxford
languages define airfare as “the price to be paid by an aircraft passenger for a particular
journey”. We can also define fare as:
1. The charge for a passenger to fly from origin to destination.
2. The amount a passenger pays, including the conditions for travel at this amount
(that is, the rules and restrictions that must be satisfied in order to qualify for a
specific fare). Together, fares and rules form an infrastructure used for auto
pricing (identifying a fare electronically).
3. The charge for a passenger to fly a given segment (city pair).
Air fare has 11 components that includes market (city pair), rule number, fare class,
one- way/round-trip indicator, MPM or routing number, footnote(optional), currency,
fare amount, effective date, discontinue date, and mileage. Airfares are typically made
up of fare and rule components that define the airfare product, services and price and
include-origin/destination pair, fare class, one-way/round-trip indicator, fare amount,
validity dates, mileage and other rules. Published Fares displayed on the GDS (Air
170 Tariff) apply to direct travel when no stopover or connections are made between the
point of origin and the destination. In certain cases, stopovers and/or connections are Fare Constructions
permitted in accordance with the routing quoted against the corresponding fare.
The mileage system is to be applied whenever the travel between two cities is via one
or more cities where a passenger disembarks and embarks, makes stopovers at such
intermediate points or connects from one flight to another; and such routings do not
come within the stipulated Route Reference, if any given against the fare between the
origin and destination. Between two cities a Maximum Permitted Mileage (MPM) is
published and is displayed when fare request is made on GDS. Maximum Mileages
are also constructed in case the through fare is not published by use of “Mileage Add
ons”.
The distance between two cities connected by direct air services, with shortest operated
distances, are also established. These distances are called Ticketed Point Mileages
(TPM’s) and are used to compute the total mileage of a journey flown. It is significant
to identify the Global Indicators(direction) of travel as different Maximum Permitted
Mileage(MPM) applied between two cities always depend upon the route of travel.
Hence, you will find Global Indicators (GI) such as EH, AP, TS etc., precede the
“MPM” figure in published fares.

11.2 TERMINOLOGIES FOR AIR FARES

As a student of tourism it is essential to understand the terms that are used by the
industry and accepted worldwide. There are few other things to be kept in mind
whenever we are choosing a route and preparing tickets and calculating fares for a
client. These are:
1. COC: It is the point or city from where the itinerary will commence. If you
are calculating fare between LON- NYC, then the country of commencement
would be the United Kingdom. Determining COC is vital since it is the first
step and will decide the final fare that needs to be determined in local currency.
2. Transit: Waiting time between two flights is called transit time and the area
where a passenger must wait is called transit area. Transit time should not
exceed beyond 24 hours and passenger must not leave airport without valid
and authorized document of immigration. In case of very long transit but within
24Hrs some airlines offers Stopover for the Purpose of Connection (STPC).
In that case passenger can leave transit area and can even leave airport without
transit visa. They will have to report again at Airport 03Hrs before departure
of onward flight. Baggage would not be handed over to the passenger during
transit.
3. STPC (Stopover for the Purpose of Connectivity): Term of STPC used
for the passenger having long transit for more than 08Hrs and less than 24Hrs
as a transit to get boarded to their onward connecting flight. This stay should
not exceed beyond 24hrs else a transit visa would be required for the passenger,
even he/she does not leave transit area of that airport. STPC can be availed
by prior booking from concerned airline on charges if not included in basic
fare. Most of airlines issue a STPC voucher for passenger convenience as a
pre-booking for hotel. An agent should check fare notes before issuing an e-
ticket to check whether STPC will be provided or not; in order to inform their
passengers well in time and avoid any discrepancy at the airport. 171
Airport Handling 4. Stopover: When a passenger wants to stay between Origin and Destination
for more than 24Hrs is called stopover. For example, if a passenger is traveling
like DEL-DOH-LON and want to take a stay at Doha for a couple of days it
is known as stopover at Doha. In that case passenger has to show proof of
valid travel documents and visa for Qatar. Some airlines usually offer stopover
programs from their end as well, on prior information and necessary
requirements. Suppose you were flying from New York to Los Angeles, and
you wanted to stop and visit your aunt in Indianapolis on the way. Such a visit
would constitute a stopover in Indianapolis. Some fares allow free stopovers,
others allow stopovers for an additional fee, and many fares do not allow
Stopovers at all. Now, your flight might be routed through Indianapolis anyway,
and you might even have to change aircraft there. You might think you could
“beat the system” by booking a connecting flight for the next day. You usually
cannot do so, since if you do not depart your intermediate point (Indianapolis)
within 4 hours of your arrival there, it would normally be considered a stopover.
Therefore, such an arrangement would not be allowed if the fare did not
permit stopovers.

11.3 TYPES OF JOURNEY

The first step to consider while calculating the air fare is to identify the kind of journey
a client is planning to go on. The journeys can be categorised as below:
1. One Way abbreviated as OW is when the traveller just goes from Origin to
Destination. In a one-way journey the Origin and destination are never the
same. e.g. LON – PAR

Figure 11.1 One Way Trip

2. Round Trip or RT is when the traveller starts from one point and comes
back to the same point using the same route is called as round trip journey
e.g. JFK-LON-DEL-LON-JFK

Figure 11.2 Round Trip

3. Round the world - The journey in which the traveller travels around the
world and crosses the international timeline, visiting multiple places e.g. JFK-
>SYD->HKG->DEL->LON->JFK. Passenger travels from a Point (origin)
and return thereto which involves one crossing of the Atlantic Ocean and only
one crossing of the Pacific Ocean.
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 Fare Constructions

Figure 11.3 Round the World Trip

4. Circle trip: When the traveller starts from one location, goes to multiple
locations and come back at same location where he started e.g. JFK-LON-
DEL-JFK

Figure 11.4 Circle Trip

5. Open Jaw: An open jaw is defined as “When you travel to one city and
return from another”. This happens when the traveller goes from one place to
another by air, from there, goes to a third place by other means of travel, and
then takes a flight back to where he started. E.g., a holiday-maker might fly
from London to Paris, spend sometime touring France, and return directly to
London from Nice. He flies into one city in the country, but depart from
another. The travel between the two points/ cities n the country is by means
other than air. This is an Open Jaw journey.
Open jaw journeys may have different variants such as:
 If travelling at Normal fares this would be abbreviated as NOJ,
 If the journey is with Normal fares it may also be referred to as a
Turnaround Normal Fare Open Jaw(TNOJ) where your destination could
also be referred to as your point of turnaround
 If the fare is a Special fare the abbreviation would be OJ.
 When you have an open jaw at either the origin or destination, you have
a Single Open Jaw (SOJ).
 When the open sector is in the country of origin for eg. a client might be
in London, fly from there to Paris, (Outbound) and return directly from
Paris but to Manchester (Inbound). This is still an Open Jaw, but may
also be called an Origin Open Jaw (OOJ) or Origin Normal Open Jaw
(ONOJ).
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Airport Handling

Figure 11.5 Origin Open Jaw

 The open sector can also be in the country of destination. The following
example is an open jaw that occurs at the destination, example, you are
travelling from London Heathrow to Sydney, Australia (SYD)
(Outbound). You decide to take a train from Sydney to Brisbane and
then return to London (Inbound). The train trip from Sydney to Brisbane
is referred to as a surface sector, which is any part of your journey in
which the mode of travel is not flying. Surface sector travel can include
non-flight options such as ship or boat. Your routing is:

Figure 11.6 Destination Open Jaw

 Journeys can also have open sectors at both the origin, and the turnaround.
A journey outward from London to Sydney, returning from Brisbane to
Manchester, would be a Double Open Jaw (DOJ).

Figure 11.7 Double Open Jaw

Check Your Progress - 1

1. Define Air Fare.

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2. What are the different types of air fares

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3. What is the difference between a round trip and a circle trip? Fare Constructions

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11.4 FARE BASIS

Fare basis is an alphabetic or alpha-numeric code used by airlines to identify a fare
type and allow airline staff and travel agents to find the rules applicable to that fare.
Although airlines now set their own fare basis codes, there are some patterns that have
evolved over the years and are still be in use.
The Fare Basis is the code that appears on the ticket in the Fare Basis box. It can
include letters, numbers, and up to two slashes (/). A Fare Basis is a compilation of the
fare class or ticketing code and one or two ticketing designators.
The meaning of these codes is not often known by the passenger, but conveys information
to airline staff, for example they may indicate that a ticket was fully paid, discounted,
part of an excursion package, or purchased through a loyalty scheme. The fare basis is
normally shown on the air ticket. On older paper tickets, it was highlighted on the
relevant coupon for that flight. On modern e-tickets, it is often printed under the flight
details. A fare basis will be 3 to 7 characters long but can be up to 8 characters. Global
Indicators (GI) are to be applied as per the route of travel.
Fare basis codes can also tell an agent whether a fare is refundable, good for one-way
or round-trip tickets, departing to or from specific countries, combinable with other
fares and good in high or low season, as well as how far in advance the fare can be
booked; and whether there are any routing restrictions or change penalties.
Example: Fare basis code YH7SNR gives the airline staff the following
Y: Economy fare class ticket.
H: It’s a high-season ticket
7: booked seven days in advance S: It’s a Short-haul flight
NR: The ticket is non-refundable
Let us understand a few components of a fare basis code:
 Fare codes always starts with a letter called a booking class or Reservation
Booking Designator (RBD) which almost always matches the letter code that
the reservation is booked in. Other letters or numbers may follow.
 Booking codes are the identifiers used by the airline’s revenue management
department to control how many seats can be sold at a particular fare level.
For example, a plane may have 25 economy seats still available and the airline
may show it in a reservation system as Y7 K5 M4 T6 E3 which indicates how
many of each booking class can be reserved. Some codes cannot be sold by
agents, and those seats may be reserved for international connections, loyalty
programs, or airline staff relocation.
Let us use an example to elaborate and understand fare basis - LN Stands for
line number same as a serial number. Further let us refer to LN 19. Here the 175
Airport Handling letter ‘U” is the RBD of premium economy class designated by a particular
airline. Another airline may use a different letter for the same class. RIN may
indicate return fare for international travel and the last two letters PV may be
a code for a particular class for a particular airlines. In this example PV stands
for premium economy value class, YF stands for economy flexi fare and YV
for economy value fare.

LN FARE BASIS OW INR RT INR

19 URINPV 31665
20 URINPV 32000
21 QRINYF 32730
22 WRINYV 32730
23 QOINYV 16700
24 QONGSDYV 16700

Table 11.1 Fare Basis Code

(LN: Line Number, OW: One Way Fare in INR. RT: Return Fare in INR)

Deciphering fare basis codes takes practice and knowledge specific to the airline, as
each one has its own style for writing codes.

11.5 STEPS OF FARE CONSTRUCTION

Air fare constructions are based on what is termed as a Mileage system. It identifies
the permitted total of ticket point mileages between two non-stop destinations or transit
points and provides the official distance used between two cities, and decodes the
various location/destination codes. Given in the table below are the steps to construct
air fares based on the mileage system:
Steps Term Used Particulars
1. FCP Fare Construction Points
2. TPM Ticketed Point Mileage (Sum)
3. MPM Maximum Permitted Mileage of Origin- Destination (O- D)
4. NUC Fare as per Routeing (OW/ RT)
5. ROE IATA Fare of Exchange
6. Rule/ As per fare
Condition
7. EMA Extra Mileage Allowance (Deduction if available/applicable)
8. EMS Excess Mileage Surcharge (if required)
9. HIP Higher Intermediate Point Fare (Mandatory)
10. CF Constructed Fare (NUC)
11. TCF Total Fare in Local Currency
Table 11.2 Steps of Fare Construction

176 Let us now elaborate in detail the various steps in the construction of air fares
1. Fare Construction Points: Fare Constructions

The point of origin and the point of destination of the journey are fare construction
points. FCP is any of the cities on an itinerary used as the start and finish of a
particular fare. FCP means the terminal points of a fare component (also termed
as fare break points).
A fare component is defined as a portion of an itinerary between two consecutive
fare construction points. If the journey has only one fare component, the points of
origin and destination are the only fare construction points. This happens when the
Journey is done by a direct flight. Basically a fare break point means the destination
where a given fare ends. For example: The fare break point for a passenger flying
from Washington DC to Kansas City via Cleveland is Kansas City. One or more
fare components create an itinerary.
2. Ticketed Point Mileage (TPM) :
TPM can be defined as the actual number of miles that are used for constructing
an Itinerary between two points or cities. TPM can be greater, less or equal to
MPM since TPM is the actual miles that are used for constructing a particular
itinerary.
When calculating an airfare or to establish prorate factors, the Ticketed Point
Mileage (TPM) needs to be determined. ATPM represents a distance covered by
one flight coupon of a passenger ticket and is calculated on the basis of non- stop
or through scheduled air services. The official source for flown mileages between
all points is the TPM Manual that includes more than 65,000 city pair mileages.
TPM constantly change as they are based on scheduled flights, wherein as new
routes are added or as other routes are decommissioned. It is therefore important
to use the latest TPM data set for fare construction and pricing. Using outdated
data can lead to incorrect fare values and loss of revenue.
3. Maximum Permitted Mileage (MPM):
It is the maximum mileage that may be travelled for a fare component. In fare
construction, the Maximum Permitted Mileage (MPM) distances represent the
maximum distance between two specified international points established on the
basis of the shortest combinations of non-stop sectors and, where applicable,
over specified construction points increased by 20%. The MPM Manual contains
close to 7 million MPM distances where you can search for the MPM value by
selecting the origin city name or city code and the destination city name or city
code.
MPM constantly change as they are based on scheduled flights, where new routes
are added or as other routes are decommissioned. It is, therefore, important to
use the latest MPM dataset for fare construction and pricing. Using outdated data
can lead to incorrect fare values and loss of revenue.
4. The Neutral Unit of Construction (NUC):
NUC stands for the Neutral Unit of Construction. NUC is a unit used to build
fares between two cities. NUC is a common unit which is used globally for
constructing mileage-based fares by all airlines. All international fares are quoted
in NUC and later converted to local currency of respective countries. This creates 177
Airport Handling uniformity in fare construction globally. NUC is equivalent to the US dollar and
has been designated by IATA as the sole unit of constructing a fare between two
cities. Even though local currency exchange rates may vary from country to country
NUC level remains constant. A neutral unit of construction is “a common
denominator used to calculate a total when adding fares in different
currencies.”
Fares are calculated entirely in local currency- for journeys from the UK, this is
the GBP, for journeys from France its EUR and so on. It is easy to compare
different fares if it is of the same country as it is in the currency of that country. For
eg. if there are three fare quotations of GBP210.00, GBP199.00 and GBP254.00,
there is no complication to identify the lowest quoted fare.
What if the fares to be compared are in different currencies? To start with it one
must know the appropriate exchange rates, and then a calculator will be required.
Altogether this would be more complicated than comparing three fares in the
same currency. Therefore, Passenger Air Tariff publishes fares for any journey in
both the local currency of the country of departure, and in NUCs.
NUCs are of course, a fictitious currency and passenger cannot pay a fare in
NUCs. Neutral Units of Construction are converted into local currency fares by
applying IATA Rates of Exchange. As mentioned earlier, NUC rates are pegged
approximately to the US Dollar.
5. Rates Of Exchange (ROE):
IATA Rates of Exchange (IROE) provides monthly updates of IATA currency
rates of exchange used by the industry for fare/rate construction. They are built
based on the average of the five banking days ending on the 10th of each month.
IROE is governed by Passenger Composite Resolution 024c and it enables to
build fares in the Neutral Unit of Construction (NUC). The IATA Exchange Rates
are reports used to perform interline invoicing and settlement between airlines.
These are world currencies published and monitored against three base currencies
(EURO, GBP and USD). These Reports are prepared specifically for the
Commercial and Revenue Accounting departments of airlines, for the Global
Distribution Systems (GDSs) and for interested System Providers.
6. Rules/ Condition:
Identify the rule number, if any and then follow relevant conditions. These are
based on the:-
(i) Revenue Management System:
Different airlines create their own fare basis using the basic rules and principles
of IATA. These fare basis are dependent on several factors and conditions
especially those regarding seasonality, time of week, periods of application,
stopover and transfers and flight application.
The first alphabet of the fare basis is known as the Reservation Booking
Designator (RBD). It indicates the type of fare applicable on a particular
journey. When booking a ticket, regardless of whether it is using a published
or unpublished fare, there are letters that are assigned to different fares.
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 The first Alphabet of the Fare Basis is the RBD and indicates the booked Fare Constructions
cabin and fare.
 F, Pare the letters most commonly used to indicate First Class.
 J, C, D, Z are the letters most often used to represent Business, or
Executive Class.
 Y is almost universally used to indicate a full fare economy ticket.
 B, H, L, M, V, etc. are just some of the letters indicating subclasses
(reduced, restricted, and/or discounted fares). These letters vary by airline
and in value. On one airline B may be indicative of a more expensive
ticket. On another airline L may represent a ticket booked on a seat sale.
 X, U, R area few of the letters commonly used to indicate a fare purchased
from a consolidator.
(ii) Fare Inclusions:
Any tax or charge imposed by government or other authority, or by the operator
of an airport, in respect of a passenger or the use by a passenger of any
services or facilities will be in addition to the published fares and charges; and
shall be payable by the passenger, except as otherwise provided in Carrier’s
Regulations.
 Airlines pay GDSs which is known as Distribution Cost.
 GDSs then pay OTAs to close the sale.
 Travel agents booking from the GDS terminal pay a fee for using its service
 Customers booking via an OTA sometimes pay a service fee
 For Direct bookings, customer pays the airline’s payment gateway directly
and as soon as the payment is processed, a CRS is notified and generates
a booking confirmation number. If the booking is made via OTA or meta
search website, they use their own payment gateway.
7. Extra Mileage Allowance (EMA)
Extra mileage allowance is a grace allowance in mileage which is permitted when
travelling via a certain city(point). Extra mileage allowance is applicable for routings
throughout the globe via certain points hence it is essential to always check for
EMA table before applying a surcharge for the itinerary.
For Example:

Table 11.3 (EMA) Extra Milege Allowance 179

Airport Handling 8. Excess Mileage Surcharge (EMS)
EMS is calculated when TPM or the total number of miles flown exceed MPM or
Maximum Permitted Miles. In a scenario where TPM exceeds MPM, a surcharge
is added to the fare based upon a calculation, however, EMAor Extra Mileage
Allowance should always be considered before calculating surcharge. In the event.
TPM is greater than MPM after adding EMA then the chance for surcharge is
negated. However such situations don’t occur frequently and at times even after
considering EMA, the surcharge applies.
In the event that the mileage is exceeded, a surcharge of between 5 - 25% can be
assessed for an additional 5 - 25% mileage, respectively. Beyond 25% additional
mileage, the through fare must be broken. This scenario is covered in the next level
of Airfares and Ticketing. So ‘mileage surcharges’ apply in the following stages:
For a mileage increase if the fare is increased by:
Not more than 5% : 5%
More than 5%; but not more than 10% : 10%
More than 10%; but not more than 15% : 15%
More than 15%; but not more than 20% : 20%
More than 20%; but not more than 25% : 25%
9. Higher Intermediate Point Fares- (HIP)
In any routing permitted at the direct route normal fare, there is a higher direct
route normal fare of the same class between any two (stopover) points; the fare
for the component must be raised to the level of such higher fare.
HIP check is one of the most common checks used in fare construction. HIP
stands for Higher Intermediate Point. It is a fare component check which ensures
that the fare in NUC from fare component origin to fare component destination is
not lower than the NUC from/to any intermediate ticketed point in the same
component.
The HIP check is always undertaken to-from intermediate stopover points
regardless of where the passenger buys the ticket or where the ticket is issued. An
ETKT is deemed to be issued in the country in which the electronic record is
created however it does not affect the HIP check any more. The HIP Check is
made, for each fare component, by comparing the published fares from:
a. fare component Origin to each Intermediate Stopover point.
b. each Intermediate Stopover point to each subsequent Intermediate Stopover
point
c. each Intermediate Stopover point to the subsequent Fare Break Point/
Destination.
In case any fare as per (a), (b), (c) is higher than the Origin - Fare Break Point /
Destination fare, such higher fare will be applied or surcharged, as per mileage
calculation. In case there are multiple Higher Intermediate Fares (HIP’s), the highest
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 of such fares will be applied when comparing normal fares for the HIP Check; the Fare Constructions

comparison will be made in the same direction as the fare component. When using
half RT fares, the comparison will be made using half RT fares. When using one
way fares, the comparison will be made using one way fares. When checking the
HIP, it is necessary to validate the following conditions:
 Day of week, fare level
 Seasonality(including blackout dates)
 Flight application
 Number of stopovers
 Number of transfers
When more than one normal fare is published for the carrier and class of service
used, the lower/lowest fare level may be used; provided all stopover, transfer,
seasonality or day of week limitations of such lower/lowest fare are satisfied
(excluding stopover charges). If in any indirect routing permitted at the direct fare
plus a mileage surcharge, then there is a HIP. Therefore, the fare for the component
must be raised to the level of such higher fare- increased by the amount of mileage
surcharge (i.e. 5% -5M, 10%-10M, 20 % -20M etc.) required for the fare
component.
 Exceptions to Higher Intermediate Points:
Several exceptions to the HIP Check have been filed by various countries
and carriers, one of the major exceptions applicable from India is as
follows:
“For passengers originating from India for travel destined to USA/Canada,
when stopovers are taken in Europe or UK, Higher Intermediate Fares (HIP)
are not applicable from points in Europe/ UK to USA/ Canada.”
10. Constructed Fare:
The fare calculated after applying all the rules is known as a constructed fare and
is represented in the form of NUC value. At this point it is crucial to recheck that
the fare is done at the end in order to either avoid or add any fare applicable to the
routing, as per the mileage principle which may have been overlooked leading to
incorrect fare calculation.
11. Total Fare in Local Currency:
International fares are published in the Local Currency Fare which is normally the
national currency of the country of commencement of international transportation.
For example, international fares from Malaysia are denominated in Malaysian
Ringgit which is the national currency of Malaysia. However, there are groups of
countries that express their Local Currency Fares in a currency other than their
own national currency. These countries are divided into two main groups namely
US dollar and Euro: 1. US dollar (USD) countries 2. Countries Publishing Fares
in Euro. Additionally, passenger fares and excess baggage charges are established
in Euros for some countries that do not have the euro as their national currency.
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Airport Handling
Check Your Progress–2

1. What are the steps involved in the construction of an air fare?

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2. Expand the following abbreviations:
a. TPM : …………………………………………………………….
b. MPM : …………………………………………………………….
c. NUC : …………………………………………………………….
d. ROE : …………………………………………………………….
e. EMA : …………………………………………………………….
f. EMS : …………………………………………………………….
g. HIP: …………………………………………………………….

11.6 LET US SUM UP

One of the most important aspects of the airline industry is that concerned with revenue
management. Air fare construction needs a lot of practice and expertise. The construction
of air fares are technical and dependent on many factors that should be met by
international standards and yet are competitive.
Airfares are typically made up of fare and rule components that define the airfare
product, services and price; and include- origin/destination pair, fare class, one-way/
round-trip indicator, fare amount, validity dates, mileage and other rules. Air fare
construction is agreeably the most important and crucial task of aviation industry.

11.7 FURTHER READINGS

 A P Rastogi, 2007 Air Travel Ticketing and Fare Construction
 Poonam Pradhan, 2014, Air Travel Ticketing and Fare Construction

11.8 CLUES TO CHECK YOUR PROGRESS

EXERCISES

Check Your Progress-1

1. Refer to section 11.1 and 11.2

2. Refer to section 11.3
3. Refer to section 11.3
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 Fare Constructions
Check Your Progress-2

1. Refer to section 11.5

2. Refer to section 11.5

ANNEXURE – CASE STUDY FOR FARE

CONSTRUCTION
1. Steps for One Way Fares Construction (OW)
A One-way(OW) journey is composed of a place of Origin, a place of Destination
which are mandatory, apart from that an Intermediate point/s could also be involved
whether through Passenger’s choice or for flight connection purpose. In a one-
way journey the Origin and destination are never the same.
i. One-way (OW) Fare Construction without Intermediate point/s
When the origin and Destination are connected directly without any intermediate
points then such Fares are deemed to be ‘Direct Fares’ and need no Fare
Construction and can be quoted as published either by the Carrier or the
PAT.
Example: BOM-BAH fare NUC 210.00 is a direct published Fare and needs
no further fare construction.
ii. One-way (OW) Fare Construction with Intermediate point/s
When a one-way journey involves an intermediate point/s, such fares need to
be constructed between the Origin and the Destination involving such
Intermediate points, as per the following IATA/UFTAA Fare Formula. These
Fares are termed as ‘Constructed Fares’
Example: BOM-BAH – FRA In this case it would not be always possible to
apply the BOM-FRA Direct Fare as the Journey involves an Intermediate
point viz. BAH and hence this Fare needs to be constructed accordingly.
Following are the basic steps in order to construct the fare from point of origin to the
destination point with one or more intermediate point/s on the routings.

Steps Term Used Particulars

1. FCP Identify the fare construction points of thefarecomponent.
2 NUC Quote the in Neutral Unit of Construction from the origin to
the destination based on global indicator, fare type and
carrier code.
3 RULE Identify the rule number, if any. Follow rule and check for
specified routing.
4 MPM Note the Maximum Permitted Mileage between Origin and
Destination of fare component.
5 TPM Component the Ticketed point Mileages and compare the
sum with MPM 183
Airport Handling
6 EMA If TPM exceeds MPM, Look for an Extra Mileage
Allowance or TPM Deductions.
7 EMS If EMA is nil or in-sufficient, determine the Extra Mileage
Surcharge
8 HIP  Look for a Higher Intermediate Point Fare from
 Component origin to intermediate stopover
 Intermediate stopover to another stopover
 Intermediate stopover to component destination
 If there is a higher fare, replace the Origin-Destination
NUC with this HIP Fare and apply EMS if any
9 RULE Follow HIP Fare Rule, particularly conditions on stopovers,
transfers seasonal / week applications
10 AF Determine the applicable fare in NUC which is the result of
above steps
11 CHECK Apply Backhaul Formula from Origin to highest rated
BHC stopover point if any
12 TOTAL Get the Total Result of all the above steps in NUC
13 IROE  Multiply the NUC total by the IATA Rate of Exchange
based on the COC or country of commencement of
international travel.
 Drop trailing zeroes if any
14 LCF  Round the resulting Local Currency Fare.
 Follow instructions on how to round off.

2. Construct the cheapest fare for the booking as per details given below:
1. EK 301 Y 04JAN DEL DXB HK1 0400 0800
2. BA 342 Y 10JAN DXB LON HK1 1230 1530
3. SK 1240 Y 05FEB LON CPH HK1 1445 1715
4. SK 556 Y 09FEB CPH FRA HK1 1235 1820
ROE 75.30
TAX 229WO TAX 555AE TAX 1450FR TAX 89IZ
TAXES 300YR
TAX 1850UB TAX1950GB TAX
17500 YQ
ECONOMY CLS FARES, MPMs & TPMs
FROM TO TPM OW - NUC RT - NUC GI/MPM
DELHI DUBAI 1360 434.89 724.83 EH1632
COPENHAGEN 3820 2023.80 3113.40 EH5682
184
 Fare Constructions
FRANKFURT 3804 2023.80 3113.40 EH5152
LONDON 4169 2180.33 3354.29 EH5598
CHICAGO 7476 3118.80 5359.16 AT10206
DUBAI DELHI 1360 604.56 1097.47 EH1632
COPENHAGEN 2994 1990.70 3314.21 EH4372
FRANKFURT 3008 1731.99 2883.93 EH3944
LONDON 3403 1745.61 2905.72 EH4304
CHICAGO 7200 2627.07 4548.83 AT9009
COPE- DELHI 3821 3292.01 5060.47 EH5394
NHAGEN
DUBAI 2994 3816.25 5870.93 EH4372
FRANKFURT 422 404.50 506.04 EH506
LONDON 594 404.50 506.04 EH702
CHICAGO 4262 3303.53 5678.58 AT5114
FRANK- DELHI 3804 3329.18 5120.68 EH5152
FURT
DUBAI 3008 3296.90 5072.26 EH3944
COPENHAGEN 422 404.50 507.22 EH506
LONDON 396 404.50 507.22 EH4051
CHICAGO 4334 2953.21 5092.12 AT5200
LONDON DELHI 4169 3170.21 4875.69 EH5598
DUBAI 3403 2900.93 4461.56 EH4304
COPENHAGEN 594 404.50 507.22 EH712
FRANKFURT 396 404.50 507.22 EH475
CHICAGO 3953 4200.43 6460.79 AT4743

SOLUTION:
Fare Construction Points (FCP) – DELFRA ‘y’ Class One Way (OW)
Step -1: Convert the Booking into Routing as Below checking ‘No Stopovers’ and
mention Ticketed Point Mileages for each city pair travelled in the routing.
DEL
1360 DXB
3403 LON
594 CPHR 185
Airport Handling 396 FRA
5753 – Total
Step 2 – Construct fare as per the Mileage Principle.
FCP – DEL FRA ‘Y’ CLS OW
TPM – 5753
MPM – 5152
NUC – 2023.80
ROE – 75.30
RULE – AS PER FARE BASIS
EMA– NOTAPPLICABLE
EMS – REQD. TPM/MPM; 5753/5152 = 1.11
=15% I.E. 15M (will raise the fare by 15% as mileage exceeds)
HIP -
HIP TABLE

DEL DEL
DXB 434.89 DXB
LON 2180.33 1745.61 LON
CPH 2023.8 1990.7 404.5 CPH
FRA 2023.8 1731.99 404.5 404.5 FRA

HIP - DEL LON = 2180.33

CF – HIP FARE (if appl.) + EMS (if appl.)
= 2180.33 (DEL LON) + 15M
= 2180.33 + 2180.33 X 15/100
= 2180.33 + 327.04
= 2507.37
LCF – CF X ROE
= 2507.37 X 75.30
= 188805.67 (To be round off to next INR5 multiple)
= INR 1,88,810
TOTAL FARE – FARE + TAXES

186