What Fare construction means
A one-way trip on a single airline between two cities may be priced from one published fare. Longer trips with connections, stopovers or several carriers are not. Each part of the journey has to be priced in a defined way, and fare construction is the method the industry uses to do it, whether an agent builds the fare by hand or a GDS pricing engine does it automatically.
The basic building block is the fare component: the part of an itinerary between two consecutive fare construction points. IATA's distribution standards site cites Resolution 012 for this definition, and ATPCO's glossary treats a fare construction point as another name for a fare break point. A simple journey with no breaks has only its origin and destination as construction points.
For each component the fare must be valid for the route flown. Many international fares use the mileage system instead of a fixed routing map. The sector distances are added and compared with the maximum the fare allows. If the journey is too long, a surcharge applies or a different fare must be used. A higher intermediate point (HIP) check then makes sure the passenger does not pay less than the fare to a stopover point on the way.
Components are then combined under the fare rules on combinations, such as round trips, circle trips and open jaws. Every amount is expressed in NUC, added together and converted once into local currency using the IATA rate of exchange. The result is the fare calculation line printed on the e-ticket.
How Fare construction works
Manual and automated pricing follow broadly the same sequence for each fare component.
- Break the journeyDecide the fare construction points, usually the origin, turnaround and any stopovers that are used as break points, which split the trip into fare components.
- Choose the fareSelect the applicable fare for each component in the right cabin, direction and validating carrier, checking its fare rules and routing basis.
- Check mileageAdd the ticketed point mileages of each sector and compare the total with the maximum permitted mileage, applying any extra mileage allowance or excess mileage surcharge.
- Check intermediate faresRun the HIP and other minimum checks so the component is not priced below the fare to an intermediate stopover point.
- Combine componentsCombine the components into a pricing unit such as a round trip, circle trip or open jaw, following the combination rules.
- Convert and finishAdd components and surcharges in NUC, multiply by the IATA rate of exchange for the country of commencement, round, and add taxes and carrier charges.
Fare construction in practice
Illustrative mileage check. A fare from city A to city C allows a maximum permitted mileage (MPM) of 3,000 miles. The traveller flies A to B (1,700 ticketed point miles) and B to C (1,450 miles), a total of 3,150. That is 5% over the MPM, so a 5% excess mileage surcharge is added to the A to C fare. If the total had been within 3,000 miles, the direct fare would apply with no surcharge.
Illustrative conversion. Two fare components of NUC 410.00 and NUC 385.50 give a total of NUC 795.50. If the IATA rate of exchange for the country where travel starts is 3.67, the fare is 2,919.49 in local currency before rounding to that currency's rounding unit. The figures here are invented to show the arithmetic, not real fares or rates.
Who uses it
Advantages and limitations
Advantages
- A common method lets fares from many airlines and countries be combined on one ticket.
- The mileage system allows reasonable routing flexibility without a separate fare for every path.
- Expressing amounts in NUC keeps multi-currency calculations consistent until the final conversion.
Limitations
- The rules are detailed and exception-heavy, so manual construction needs specialist training.
- Errors in mileage, HIP or combinations often surface later as agency debit memos.
- Fare construction applies to filed fares; airline offers priced dynamically through NDC follow the airline's own logic.
Frequently asked questions about Fare construction
What is a fare component in airline ticketing?
A fare component is the part of a journey between two consecutive fare construction points that is priced with one fare. A return trip is usually two components, one out and one back. Each component has its own fare basis and appears separately on the fare calculation line.
What are TPM and MPM?
TPM, ticketed point mileage, is the published distance for each flight sector on the ticket. MPM, maximum permitted mileage, is the longest distance a mileage-based fare allows between its two points. IATA bases MPM on the shortest operated route plus 20%.
What is an excess mileage surcharge?
It is an increase applied when the total ticketed point mileage of a fare component exceeds the maximum permitted mileage. IATA applies it in steps of 5%, 10%, 15%, 20% or 25%. Beyond 25% the routing cannot use that fare and must be priced another way.
What is a HIP check in fare construction?
A higher intermediate point check compares the through fare with fares from the origin to any stopover point, or from a stopover to the destination, in the same class. If one of those is higher, the higher fare is charged, so a stopover never makes a trip cheaper.
Do low-cost carrier fares use fare construction?
Usually not. Most low-cost carriers sell point-to-point fares on their own systems with no international fare construction or interlining, so each flight is priced and ticketed separately. Construction rules matter mainly for filed fares on network airlines and interline tickets.
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