What do you understand by Fare Construction in Aviation industry? Explain the steps of Fare Construction.

Fare Construction in the Aviation Industry:

Fare construction in the aviation industry refers to the process of determining the fare for a particular air travel itinerary. It involves understanding the rules, conditions, and components that contribute to the final price of a ticket. Fare construction is a complex task governed by various factors, including the airline's pricing strategy, fare rules, and the specific routing of the journey. Here are the key steps involved in fare construction:

1. Routing and Itinerary:

   • The first step in fare construction is determining the routing and itinerary of the journey. This includes specifying the departure and arrival cities, layovers, and any stopovers during the trip. The combination of these factors forms the basis for fare calculation.

2. Fare Basis Code:

   • Each ticket is associated with a unique fare basis code, a alphanumeric code that represents the specific fare rules applicable to the ticket. Fare basis codes include information such as the booking class, ticket restrictions, and the fare calculation method.

3. Booking Class and Cabin:

   • Airlines classify seats into different booking classes within each cabin (e.g., Economy, Business, First Class). Each booking class has its own fare and associated conditions. Fare construction involves selecting the appropriate booking class based on the traveler's preferences and budget.

4. Seasonality and Time Restrictions:

   • Fare rules often include provisions related to seasonality, specifying different fares for peak and off-peak periods. Time restrictions may also apply, influencing the validity and pricing of the ticket based on factors like day of the week or time of day.

5. Stopovers and Transfers:

   • The number and duration of stopovers or transfers impact the fare. Some fares allow free stopovers, while others may charge for additional segments. Fare construction considers these elements and their implications on the overall price.

6. Fare Calculation:

   • Fare calculation involves applying specific pricing algorithms based on the chosen routing, fare basis code, booking class, and other relevant factors. This step determines the base fare, taxes, fees, and any surcharges that contribute to the total ticket price.

7. Taxes and Fees:

   • Various taxes and fees, such as airport taxes, security fees, and fuel surcharges, are added to the base fare. These charges are imposed by government authorities or airports and contribute to the overall cost of the ticket.

8. Currency Conversion:

   • If the journey involves multiple countries with different currencies, fare construction includes currency conversion. Exchange rates are applied to determine the equivalent amount in the currency of sale.

9. Ticketing and Issuance:

   • Once the fare is constructed, the ticket is issued to the passenger. The ticket includes all relevant details, such as the itinerary, fare breakdown, fare rules, and ticket restrictions. Ticket issuance can be done through various channels, including airline counters, travel agencies, or online platforms.

10. Fare Rules and Conditions:

    • Fare construction involves understanding and applying the specific rules and conditions associated with the chosen fare. This includes provisions related to changes, cancellations, refunds, and other restrictions that passengers must adhere to during their journey.

11. Monitoring and Updates:

    • The aviation industry is dynamic, and fares may change based on market conditions, demand, and other factors. Fare construction also involves monitoring fare changes and updating pricing strategies to remain competitive in the market.

In conclusion, fare construction is a meticulous process that considers multiple factors to determine the price of an air travel ticket. It requires a comprehensive understanding of fare rules, routing options, and pricing components to provide passengers with accurate and transparent pricing for their chosen journey.