MOI UNIVERSITY

INSTITUTE OF OPEN & DISTANCE LEARNING

IN COLLABORATION WITH

SCHOOL OF TOURISM, HOSPITALITY AND EVENTS MANAGEMENT

DEPARTMENT OF TOURISM MANAGEMENT

BTT 212: AIRFARES &TICKETING

AUTHOR: JUDY KIBE

REVIEWER/EDITOR:
Copyright © Moi University, 2020

All Rights Reserved

Published By:

MOI UNIVERSITY PRESS

ACKNOWLEDGEMENT
The author wishes to thank the university council, university management and the institute of
Open Distance Learning as well as the School of Tourism, Hospitality and Events Management
and all the members of staff in the department of Tourism and Travel and tour operations for
their contribution and support which made the development and production of this module book
possible.
 TABLE OF CONTENTS

Contents
INTRODUCTION .........................................................................Error! Bookmark not defined.
ABOUT THE MODULE ................................................................................................................ 6
COURSE CONTENTS ................................................................................................................... 6
COURSE OVERVIEW .................................................................................................................. 6
Timeframe ....................................................................................................................................... 7
Study skills ...................................................................................................................................... 7
Need help? ...................................................................................................................................... 8
Teaching strategies/methodology ................................................................................................... 8
Assignments .................................................................................................................................... 8
YOUR COMMENTS...................................................................................................................... 9
COURSE OBJECTIVES ................................................................................................................ 9
Margin icons ................................................................................................................................. 10
WEEK 1 ........................................................................................................................................ 11
Topic 1: JOURNEY CONCEPT................................................................................................... 11
1.4 Part of a Journey ..................................................................................................................... 12
1.5 Counting Transfers and Stopovers .......................................................................................... 13
1.6 TYPES OF JOURNEY ........................................................................................................... 14
1.8 ACTIVITY .............................................................................................................................. 16
WEEK 2 ........................................................................................................................................ 18
TOPIC 2: AIRFARES SELECTION CRITERIA ........................................................................ 18
2.4 Fare Selection Criteria ............................................................................................................ 18
2.4.1 Fare Type ............................................................................................................................. 18
2.4.2 Class of Service.................................................................................................................... 20
2.4.3 Global Indicators .................................................................................................................. 20
2.4.4 IATA AREAS ...................................................................................................................... 20
2.5 Carrier Fare Selection ............................................................................................................. 25
2.6 Condition of the Rule .............................................................................................................. 26
WEEK 3 ........................................................................................................................................ 28
TOPIC 3: CURRENCY RULES AND ROUNDING PROCEDURES ....................................... 28
3.4 CURRENCY RULES ............................................................................................................. 29
Local Currency Fares .................................................................................................................... 29
NUC Conversion Procedure ......................................................................................................... 29
3.4.1 Rounding Local Currency Fares .......................................................................................... 29
3.6 ASSESSMENT/ACTIVITY ................................................................................................... 31
WEEK 5 ........................................................................................................................................ 32
TOPIC 4: FARE CONSTRUCTION ............................................................................................ 32
4.4 Fare Calculations Techniques ................................................................................................. 33
4.4.1 POINT TO POINT ............................................................................................................... 33
4.4.2 MILEAGE SYSTEM ........................................................................................................... 35
Fare Construction Points ............................................................................................................... 36
4.5 MAXIMUM PERMITTED MILEAGE (MPM) .................................................................... 36
4.6 TICKETED POINT MILEAGE (TPM) ................................................................................. 37
WEEK 6 ........................................................................................................................................ 38
4.7 EXTRA MILEAGE ALLOWANCE (EMA) ......................................................................... 38
4.8 EXCESS MILEAGE SURCHARGE (EMS).......................................................................... 40
WEEK 7 ........................................................................................................................................ 42
4.9 Higher Intermediate Point (HIP) ............................................................................................. 42
4.10 BACKHAUL CHECK (BHC) .............................................................................................. 44
4.12 ASSESSMENT ..................................................................................................................... 47
WEEK 8 ........................................................................................................................................ 48
TOPIC 5: RETURN TRIPS FARE CONSTRUCTIONS ............................................................. 48
GENERAL GUIDELINES ........................................................................................................... 50
5.5 SELECTING A FARE BREAK POINT ................................................................................ 50
5.6 Changing the fare break points ............................................................................................... 53
5.7.1 ASSESSMENT /ACTIVITY: 1 ........................................................................................... 55
5.7.2 ASSESSMENT/ACTIVITY: 2 ............................................................................................ 56
WEEK 9 ........................................................................................................................................ 58
TOPIC 6: TICKETING................................................................................................................. 58
6.1 INTRODUCTION .................................................................................................................. 58
6.4 TRAFFIC DOCUMENTS ...................................................................................................... 59
6.4.1Tickets ................................................................................................................................... 59
6.4.2 Miscellaneous Charges Order (MCO) ................................................................................. 60
6.4.2.1 Specified MCOs ................................................................................................................ 60
6.4.2.2 Unspecified MCOs............................................................................................................ 60
6.4.3 Multiple Purpose Document (MPD) .................................................................................... 60
TOPIC 7: METHODS OF TICKET PAYMENT ......................................................................... 62
7.4 Methods of Ticket Payment .................................................................................................... 63
7.4.1 UNIVERSAL AIR TRAVEL PLAN (UATP) ..................................................................... 63
7.4.2 NEW UATP CARDS........................................................................................................... 63
7.4.2.1 INTERNATIONAL CARD .............................................................................................. 63
7.4.2.2 NORTH AMERICAN CARD .......................................................................................... 64
7.4.2.3 AIRPLUS CARD .............................................................................................................. 64
7.5 COMMERCIAL CREDIT CARDS ........................................................................................ 64
7.6 PRE-PAID TICKET ADVICE ............................................................................................... 64
TOPIC 8: TAXES, FEES AND CHARGES ................................................................................ 66
8.1 INTRODUCTION .................................................................................................................. 66
8.3 TYPES OF TAXES, FEES AND CHARGES (TFCs) ........................................................... 66
8.4 TFC Identification ................................................................................................................... 67
8.5 General Conversion Procedures .............................................................................................. 68
TOPIC 8: GLOBAL DISTRIBUTION SYSTEMS ...................................................................... 71
8.4 Types of GDS ......................................................................................................................... 72
8.4.5GDS INNOVATIONS .......................................................................................................... 77
8.4.6 GDSs SCOPE OF SERVICES............................................................................................. 77
8.6 ASSESSMENT ....................................................................................................................... 78
APPENDICES .............................................................................................................................. 80
 ABOUT THE MODULE
Airfare and ticketing remain a dynamic area in the airline industry. This has been
made more efficiently by Information and communication technology advances. The main
purpose for this course is to expose you to international airfares calculations and ticketing and
the emerging reservation systems. The course will entail systematic steps involved in calculating
airfares, ticket issuance and other traffic documents. It will also cover the various reservation
systems used in the travel industry. You will be required to have a prior knowledge of world
geography and IATA city codes. This course is designed for people already working in the
travel industry and would want to familiarize themselves with procedures for calculating airfares.
It is also for those wishing to work in the travel industry such as the airline, travel agency or a
tour operation business.

COURSE CONTENTS
This module introduces you to the basic principle and procedures in the airfares and ticketing. It
also focuses on the information and communications technologies used in the travel industry. It
gives a systematic approach used in calculating air fares and how to produce e-tickets and other
traffic documents with the use of the reservation systems. The module includes a series of
topics that are used in the international airfares calculations. Moreover, taxes, fees and charges
will be covered that gives a complete charge for an air ticket. It will also cover the various
modes of payment for air tickets.

COURSE OVERVIEW
The module is broken down into weeks comprising topics. Each week comprises:
• An introduction to the week’s content.
• Objective/Learning outcomes.
• Glossary
• Content
• Summary
• Activity/Assessment
 • References/Further readings

Timeframe
• The expected duration of this course is 14weeks
• The formal study time is 3 Hours per week.
• The expected/recommended self-study time is 3 Hours per week.
• However, as an online, open and distance learning course, study time is dependent on the
time of the learner
• The course is designed for self-study along with some guided instruction.

Study skills
As an independent learner, your approach to learning will be different from that of your school
days: you will choose what you want to study, you will have professional and/or personal
motivation for doing so and you will most likely be fitting your study activities around other
professional or domestic responsibilities.
Essentially you will be taking control of your learning environment. As a consequence, you will
need to consider performance issues related to time management, goal setting, stress
management, etc. Perhaps you will also need to reacquaint yourself in areas such as essay
planning, coping with exams and using the web as a learning resource.
Your most significant considerations will be time and space i.e. the time you dedicate to your
learning and the environment in which you engage in that learning.
We recommend that you take time now—before starting your self-study—to familiarize yourself
with these issues. There are a number of excellent resources on the web. A few suggested links
are:

http://www.how-to-study.com/
The “How to study” website is dedicated to study skills resources. You will find links to study
preparation (a list of nine essentials for a good study place), taking notes, strategies for reading
text books, using reference sources, test anxiety.

http://www.studygs.net/distanceed.htm
This website looks at preparing for online study.
http://www.howtostudy.org/resources.php

Another “How to study” website with useful links to time management, efficient reading,
questioning/listening/observing skills, getting the most out of doing (“hands-on” learning),
memory building, tips for staying motivated, developing a learning plan.
The above links are our suggestions to start you on your way. However, be aware that Internet
addresses change frequently, so if a website cannot be accessed, use a search engine. At the time
of writing these web links were active. If you want to look for more go to www.google.com and
type “self-study basics”, “self-study tips”, “self-study skills” or similar.

Need help?
Incase of further assistance contact;
Moi University, institute of distance and open learning ([email protected]/[email protected])
Tel: 0728494978 or the course coordinator; Judy Kibe, Cell Phone No: 0722-913742 or through
[email protected]

Teaching strategies/methodology

Assignments
There should be written assignments for this course for each unit.
Assignments should be submitted at completion of each unit.
Assignments should be submitted to the course coordinator through the above given e-mail
address.
YOUR COMMENTS
Student/Lecturer evaluation
After completing Airfares and Ticketing and Information Systems we would appreciate if you
could take a few moments to give us feedback on the content, delivery and support provided
including any other aspect of this course. Your feedback might include comments on;
• Course content and structure
• Course reading materials and resources
• Course assignments
• Course activity
• Course duration
• Course support (assigned tutors, technical help etc)

COURSE OBJECTIVES
Upon completion of AIRFARES &TICKETING Course you will be able to:
 • Calculate the different airfares for various routings.
• Quote fares and issue traffic documents using ICT.
• Incorporate taxes, fees and other charges in an air ticket.
• Get familiar with emerging trends and issues in the travel industry.

Margin icons
While working through this module you will notice the frequent use of margin icons. These icons
serve to “signpost” a particular piece of text, a new task or change in activity; they have been
included to help you to find your way around this module.
A complete icon set is shown below. We suggest that you familiarize yourself with the icons and
their meaning before starting your study.

Introduction Objectives Important Point to

Learning Outcomes Note

Activity/Assignment Summary Further Reading Group Activity

Glossary Discussion Case Study Self-Test

Questions
WEEK 1

Topic 1: JOURNEY CONCEPT

1.1 INTRODUCTION
This lesson introduces you to the journey concepts. The fare calculation is influenced mainly by
the type of journey being travelled, that is you will need to identify the journey then match it
with the correct fare construction formula. This approach is known as the journey concept. This
topic also gives a description of the various journey types and the basic terms used to describe
the parts of a journey.

1.2 OBJECTIVES
By the end of the topic, you should be able to:
▪ Define the various parts of a journey.
▪ Identify the various fare construction points of a journey.
▪ Distinguish the various types of international journeys.

1.3 GLOSSARY
Origin-it is the initial starting point in the routing
Destination- it is the terminal point in a journey
Intermediate point(s) - these are transfer points
Domestic surface sectors – a pair of cities in a common country
Sector –Portion of a journey covered by a single flight coupon
Segment- Portion of a journey between the origin and the destination points
Fare component-a portion of an itinerary between two consecutive fare construction point, thus
a journey may have one or more fare components
Pricing Unit- a journey or a part of a journey which is priced as a separate entity, that is capable
of being ticketed separately.

1.4 Part of a Journey

A journey consists of the entire routing included on a ticket or group of conjunction tickets and it
is composed of the following ticketed points:
Origin
It is the initial starting point of a journey. It is also a fare construction point and is usually at the
country of commencement of the journey. For example, in this routing Santiago-X/Rio de
Janeiro-Sao Paulo-X/Johannesburg-Hong Kong. Santiago (SCL) is the origin

Destination
It is the ultimate stopping place of a journey or a terminal point in the routing. It is also
considered as a fare construction point or a fare break point. In the above routing, Hong Kong
(HKG) is the Destination.

Intermediate point(s)
These are ticketed via point(s) in between consecutive fare construction points. They are also
known as transfer points that are further classified as either: intermediate stopover points and
intermediate no stopover points. Intermediate stopover point is a point where the passenger
breaks the journey and is not scheduled to depart within 24 hours of arrival. A stopover is
arranged in advance and specified on the passenger’s ticket. Intermediate no stopover point is a
point where a passenger arrives and departs within 24 hours. It is also known as a transfer
connection or connecting point.

Exception-for travel entirely within Central America or for travel between Central America and
Panama: when a passenger arrives at an intermediate point and is scheduled to depart later than 6
hours after arrival (local time).

. X/ shows that no stopover is taken

Example
SCL-X/RIO-SAO-X/JNB-HKG
Rio de Janeiro (RIO) and Johannesburg (JNB) are the intermediate no stopover points while Sao
Paulo (SAO) is the intermediate stopover point in the journey.

1.5 Counting Transfers and Stopovers

The following guidelines will show how to count the number of transfers and stopovers in a
journey.

• For a one way fare component, count all intermediate point with a stop of more than 24
hours as a stopover.
• To count the number of transfers in a one way fare component, include all intermediate
points as transfer points. This includes all stopovers and connecting points.
• Do not include the fare construction points such as the origin and the destination when
counting stopovers and transfers.
• In the case of return trips, do not count the stopover at the point of turnaround.

Example1:

Routing: JNB-HRE-X/SIN-SYD-AKL

Number of transfers: 3
Number of stopovers out of the transfers: 2

Example 2:

Routing: JNB-HRE-X/SIN-SYD-BKK-JNB

Point of turnaround: SYD

Number of transfers for the entire journey: 3
Number of stopovers for the entire journey: 2
Number of stopovers in the first component: 1
Number of stopovers in the Second component: 1
Fare Construction Points
These are terminal points of a fare component. Also called fare break points
Fare Component
A component or a portion of the itinerary between two consecutive fare construction points.
Thus a journey may have one or more fare components.

Pricing Unit
A journey or part of a journey which is priced as a separate entity, that is capable of being
ticketed separately.
Sectors
A portion of a journey comprised of segments that is city pair.

1.6 TYPES OF JOURNEY

a. One way: is a travel from one point to another via other city/cities. One does return to the
point of origin. For example Casablanca (CAS)-New York (NYC)- San Jose(SJO)

b. Round trip is travel from one point to another and return to the point of origin by the
same air route as used for the outbound portion.- Dares salaam(DAR) –Nairobi (NBO)-
Amsterdam (AMS)-Brussels (BRU)-Nairobi (NBO)-Dares salaam(DAR).
• A round trip has only two fare components, that is, the outbound and the inbound
components.
• The outbound fare need not be equal to the inbound fare.
• The unit origin and unit destination points are the same.
Round Trip Exceptions:
• Carrier variations
• Seasonality variations
• Class of service variations
• Midweek or weekend variations
For example: Routing: Singapore-SQ-San Francisco-CX-Singapore
↓ SIN
SFO SQ (YR) 1/2RT 2019.41
 ↑SIN CX (YX2R) ½ RT 1923.19
Although the fares differ due to carrier variations, you will still consider this a round trip
as the routing outbound and inbound is the same.

c. Circle trip: It involves travel from a point and return thereto by a continuous, circuitous
air route. The origin and the final destination are the same but the outbound and the
inbound fares are not equal.

For example: Gaborone (GBE)-Harare (HRE)- Dares salaam (DAR)-Nairobi (NBO)-

Lusaka (LUN)- Johannesburg (JNB)-Gaborone (GBE)
Component 1: (GBE-HRE-DAR-NBO)
The fare is in the direction of GBE to NBO following the actual direction of travel.
Component 2: (GBE-JNB-LUN-NBO)
The fare is in the direction of GBE to NBO as any component that ends in the country of
commencement follows the reverse direction of travel.

d. Round the world: It is a form of a circle trip, which involve crossing of Atlantic and
Pacific Ocean. Amsterdam (AMS)- New York (NYC)-San Francisco(SFO)-Taipei(TPE)-
Manila(MNL)-Amsterdam(AMS)

e. Open Jaw: It is a form of return trip that is not entirely by air. It may have only two
international fare components and may contain domestic surface sectors. Such journeys
use ½ return fares. The following are the types of open jaw(OJ):

1. Single Open Jaw (SOJ): contains one surface sector.

a. Turnaround Single Open Jaw (TSOJ) - the outward point of arrival and the inward
point of departure are different cities that belong to a common country.
Example 1: TSOJ
Hong Kong (HKG)-Cape Town(CPT) surface Johannesburg (JNB)-Hong Kong.
 b. Origin Single Open Jaw (OSOJ) – the outward point of departure and inward of arrival
are different, that is the origin and destination cities are different cities belonging to the
same country.
Example 1: (OSOJ)
Los Angeles (LAX)-Taipei (TPE)-New York
2. Double Open Jaw (DOJ): contains two surface sectors, one at the origin point and the
other at the turnaround point.
Example 1: Hanoi (HAN)-Sydney (SYD) surface Melbourne (MEL) - Ho Chi Minh
(SGN)

1.7 TOPIC SUMMARY

A journey is composed of various parts namely origin, destination and intermediate points. Fare
construction points are also known as fare breakpoints or the terminal points in a journey. The
trip type determines the fare construction steps. There are various journey types that range from
one way trips and return trips. One way trip is a routing where the origin and the destination
points are not the same city. The main difference between a round trip and a circle trip are the
outbound and inbound fare components in round trip are the same while they are different in a
circle trip. When counting the transfer points, you should include not only connection points but
also stopover points.

1.8 ACTIVITY
The month of December is one of the peak seasons in tourism. It is a boom for most tourism
enterprises. Most clients prefer to spend the festive season by travelling to one or more
destinations. The following scenarios describe the various types of journey that were taken by
different passengers over the month of December last year.
1. Mr. Smith travelled from New York to Rome.

2. Mr. Keith travelled from Hong Kong to Beijing, and then went back to Hong Kong.

3. Mr. Klaus together with his wife took a long trip and travelled from Moscow to Osaka, then
to Manila and ended up finally in Wellington.

4. A group of old friends had a long break. They travelled from Lima to Amsterdam, stayed
there for a week, then flew on to Amman, then to Bangkok via two hours stop at New York, and
then finally back home to Lima.

5. Mr. Witney travelled from Nairobi to Cairo , From Cairo he cycled to point Alexandria, and
flew from here back to Mombasa

SELF TEST QUESTION

From the above scenarios answer the following question.
1. Describe the various types of journeys that were travelled by the passengers.

IMPLEMENTATION PLAN
The topic will entail 2 hours theory and 1 hour for practice.

1.8 FURTHER READING

IATA (2008). International Travel and Training programme. (5.9 edition), Montreal- Canada
WEEK 2

TOPIC 2: AIRFARES SELECTION CRITERIA

2.1INTRODUCTION
In this topic you will learn the various factors that determine the airfares selection criteria. This
includes the fare type, global indicator the predominant carrier and the rules and conditions that
accompany the fare.

2.2 OBJECTIVES
By the end of the topic, you should be able to:
▪ Determine the various factors that influence the airfares selections criteria.

2.3 GLOSSARY
Global Indicator- the global routing applicable to fares.

2.4 Fare Selection Criteria

The fare selection criterion is determined by various factors. The major factors that influence the
air fares selection are fare types, carrier, condition of the rule and the global indicator. Fares are
divided into either normal or special fares. The normal fares do not have many restrictions as the
special fares. In fare selection, the predominant carrier in a given routing should be identified.
In addition, you should comply with the relevant condition of the accompanying rule. Finally,
you will be required to establish the global indicator based on the routing flown.

2.4.1 Fare Type

The fare type is divided into normal fares and special fares. Normal fares are further divided into
unrestricted normal/primary fares and restricted normal/secondary fares. Normal fares are fares
without many restrictions. Special fares are low promotional fares. They have more restrictions
than normal fares. For instance, length of stay, advance ticket purchase requirements,
reservation, payment and ticketing, limits refundability and changeability.

Special Fares
Fare basis codes
Prime Code — the first character, identifies the class or booking code

Secondary Code(s) — the characters which follow the prime code

Excursion Fares
There are three main categories of excursion fares, each of which has two-letter Secondary
Codes:

1. General Excursion Fares

OX — One-way general excursion fare governed by excursion fare rules
EE — Return general excursion fare governed by excursion fare rules

2. PEX fares
PX — PEX, restricted instant purchase fares
SX — SUPERPEX, very restricted instant purchase fares

3. APEX fares
AP — APEX, advance purchase excursion fare, restricted
AB — SUPERAPEX, advance purchase excursion fare, very restricted

4. Series Fares
These represent a consolidation of different fare basis codes having essentially the same code
with day, week, and seasonal variations. For example YLWEE3M, YHWEE3M, YLXEE3M,
and YHXEE3M are variations of YEE3M sharing the same fare rule.
Other frequently used Secondary Codes include:
Secondary Codes Meaning
H, K, J, - Seasonality (high, low, shoulder, etc.)
X, W - Midweek (X) or Weekend (W)
N- Night
3M, 45, 14 Maximum stay (month or days)

2.4.2 Class of Service

There are various classes of service depending on the fare type. Primary/normal fare classes are
categorized into three major classes known as;
• First class: F or F1, P or P1
• Business/Intermediate/club class: C or C1, J or J1
• Economy class: Y or Y1, S or S1

Secondary Normal Fares are categorized as:

• First class: F2 or P2
• Business class: J2, C2, C3
• Y2,S2, Y11

2.4.3 Global Indicators

Quoting the right fare depends on the routing taken by a client. IATA has divided the world into
three major areas. Under each area, there are sub-areas and regions, in which in the IATA
context may have a different meaning from the generally implied by the geographical terms. The
three major areas are known as traffic conference area 1, area 2 and area 3.

2.4.4 IATA AREAS

IATA Area 1 (Traffic Conference 1, TC1)
In its entirety, Area 1 or TC1 is composed of the Western Hemisphere but has several
Classifications of sub-areas for fare construction purposes, two of which are listed below.

The first classification divides TC1 into the following sub-areas:

North America - Canada, Mexico, the U.S.A. and St. Pierre & Miquelon
Caribbean Anguilla, Antigua and Barbuda, Aruba, Bahamas, Barbados, Bermuda,
British Virgin Islands, Cayman Islands, Cuba, Dominica, Dominican
Republic, Grenada, Guadeloupe, Haiti, Jamaica, Martinique, Montserrat,
Netherlands Antilles, St. Kitts and Nevis, Saint Lucia, St. Vincent and the
Grenadines, Trinidad and Tobago, Turks and Caicos Islands, Virgin
Islands – British.

Central America- Belize, Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua

South America- Argentina, Bolivia, Brazil, Chile, Colombia, Ecuador, Panama, Paraguay, Peru,
Uruguay, Venezuela

The second classification of TC1 sub-areas includes the following:

North Atlantic Canada, Greenland, Mexico, and the U.S.A. which includes Alaska,
Hawaii, Puero Rico and US Virgin Islands

Mid Atlantic All of the Caribbean Area sub-area, Central America, South America plus
Panama Canal Zone except Argentina, Brazil, Chile, Paraguay and Uruguay

South Atlantic Argentina, Brazil, Chile, Paraguay and Uruguay (ABCPU) only

IATA Area 2 (Traffic Conference 2, TC2)

Europe, Africa and the islands adjacent thereto, Ascension Island and that part of Asia west of
Ural Mountains, including Iran
Sub-Areas
Europe - Albania, Algeria, Andorra, Armenia, Austria, Azerbaijan, Belarus, Belgium,
Bosnia and Herzegovina, Bulgaria, Croatia, Czech Republic, Denmark,
Estonia, Finland, France, Georgia, Germany, Gibraltar, Greece, Hungary,
Iceland, Ireland, Italy, Latvia, Liechtenstein, Lithuania, Luxembourg,
Macedonia, Malta, Monaco, Moldova, Morocco, Netherlands, Norway, Poland,
Portugal, Romania, Russia (west of Urals), San Marino, Serbia, Slovakia,
Slovenia, Spain, Sweden, Switzerland, Tunisia, Turkey, Ukraine, United Kingdom.

Africa:
Africa is subdivided further into regions such as;
• Central Africa- Malawi, Zambia, Zimbabwe.
• Eastern Africa- Burundi, Djibouti, Eritrea, Ethiopia, Kenya, Rwanda, Somalia, Tanzania and
Uganda.
• Southern Africa- Botswana, Lesotho, Mozambique, South Africa, Namibia and Swaziland
• Libya or Libyan Arab Jamahiriya
• Indian ocean Islands- Comoros, Madagascar, Mauritius, Mayotte, Reunion and Seychelles
Western Africa- Angola, Benin, Burkina Faso, Cameroon, Cape Verde,
Central African Republic, Chad, Congo (Brazzaville), Congo
(Kinshasa), Cote d'Ivoire, Equatorial Guinea, Gabon,Gambia, Ghana, Guinea, Guinea Bissau,
Liberia, Mali, Mauritania, Niger, Nigeria, Sao Tome and Principe, Senegal, Sierra Leone and
Togo.

Middle East - Bahrain, Cyprus, Egypt, Iran, Iraq, Israel, Jordan, Kuwait, Lebanon, Qatar,
Saudi Arabia, Sudan, Oman, Syria, United Arab Emirates, Yemen

IATA Area 3 (Traffic Conference 3, TC3)

Asia and the islands adjacent thereto except the portion included in Area 2; the East Indies,
Australia, New Zealand and the islands of the Pacific Ocean except those included in Area 1.

Sub-Areas
South Asian Subcontinent- Afghanistan, Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan,
SriLanka

South East Asia - Brunei Darussalam, Cambodia, China, Guam, Hong Kong SAR,
Indonesia, Kazakstan, Kyrgyzstan, Laos, Macau, Malaysia, Marshall
Islands, Micronesia, Mongolia, Myanmar, Northern Mariana Islands,
Palau, Philippines, Russia (east of Urals), Singapore, Taiwan Province of
China, Tajikistan, Thailand, Turkmenistan, Uzbekistan, Vietnam

South West Pacific- American Samoa, Australia, Cook Islands, Fiji, French Polynesia, Kiribati,
Nauru, New Caledonia, New Zealand, Niue, Papua New Guinea, Samoa,
Solomon Islands, Tonga, Tuvalu, Vanuatu, Wallis and Futuna Islands as well as the intermediate
islands

Japan/Korea- Japan, North Korea, South Korea

Global indicator (GI) implies the routing taken by a client. GI are related to the traffic
conference areas. For instance;

TC1- Refers to travel within Area 1 or western hemisphere (WH)

TC2- Travel within area 2 or Eastern hemisphere (EH)

TC3 – Travel within area 3 which is part of the Eastern hemisphere

TC12- travel between area 1 and 2 (AT)

TC31 – Travel between area 3 and area 1 (PA or PN)

TC123- Travel between area 1 and area 3 via area 2 (AT or SA)

TC23 – Travel between area 2 and 3 includes either Global indicator AP, RU, TS, FE or EH
Global Indicator Definition

AP between area 2 and area 3 via the Atlantic and Pacific Oceans

AT between area 1 and area 2/area 3 via the Atlantic Ocean (other than SA)

EH Within the Eastern Hemisphere or between area 2 and area 3 other than
TS/RU/FE

FE Between Russia in Europe/ Ukraine and Area 3

With non-stop services between Russia
(in Europe)/ Ukraine and area 3 other
than Japan, Korea.

PA between area 3 and area 1 via South, Central or North Pacific Oceans.

PN between Argentina, Brazil, Chile, Paraguay,

Uruguay and South West Pacific, not via North
and Central Pacific but must be via North America.

RU between Russia in Europe and TC3, on non-stop

services to/form Japan, Korea, not via another
country (ies) in Europe.

SA Between Argentina, Brazil, Chile, Paraguay,

Uruguay and South East Asia via the Atlantic
And via point(s) in Central Africa, Southern Africa,
Indian Ocean Islands only or via direct Services.

TS between area 2 and area 3 with non-stopover service between Europe and
Japan, Korea via Trans-Siberian Route
WH Within the Western Hemisphere (Area 1)

2.5 Carrier Fare Owner Selection

Fares are also determined by the predominant carrier also known as carrier owner in a given
routing. The following are steps of determining the carrier fare owner;
Step1: First crossing versus longest TPM carrier.
Step2: compare the respective fares of both carriers. The carrier with the lowest fare becomes the
fare owner.
First crossing carrier
The first crossing carrier is the airline that provides carriage on the first sector in following
hierarchical order;
1. Crossing from area to another area (Area crossing) if none;
2. Crossing from one sub area to another sub area (sub area crossing) if none;
3.Crossing from one country to another (1st international crossing)
Longest TPM carrier
Longest TPM carrier is established by adding up the ticketed point mileage of the sector flown
on the same airline. The sectors must be;
1. International or
2. Consecutive international or
3. Consecutive international and domestic
Examples
1.FRA CX HKG NZ AKL
TPMs 5688 5699
1st crossing carrier CX crossing TC23
Longest TPM NZ=5699
2. DEL TG BKK TG TYO JL HNL
TPMs 1824 2869 3831
1st crossing carrier JL crossing TC31
Longest consecutive TPM =TG 1824+2869=4693
Step2: Compare and choose the lower fare
FRA CX HKG NZ AKL (Business Class)
1st crossing carrier fare CX=Eur 8737.00
Longest TPM carrier NZ= Eur 6426.00
NZ is the carrier owner because it has the lowest fare

2.6 Condition of the Rule

When selecting fares, you should comply with the relevant condition of the accompanying rule.
Watch out for conditions such as stopover and transfer limitations, carrier conditions such as
stopover and transfer limitations, carrier conditions, specified routings and via points, plus
seasonality or time of week application. The standard conditions are SC 100 and SC 101. The
SC 100 is for conditions governing special fares (except within Europe, within South West
Pacific (SWP) and between Europe and SWP and SC 101 are for conditions governing normal
fares

A carrier specific fare takes precedence over IATA YY fares. However, if the
predominant carrier has no fare of its own, use IATA YY fares.

2.7 TOPIC SUMMARY

Fare selection criteria is determined by various factors such as the fare type, class of service
global indicator, predominant carrier and rules and conditions that accompany the fare. Match
the class of service to be travelled to the fare type. Identify the Global Indicator for the given
sector. Select applicable carrier in the case of carrier coded fares. Comply with the conditions
accompanying the fare selected especially those concerning the number of stopovers and
transfers in the routing.

2.8 Activity
Which global indicator apply for the following routings (with a non-stop sector flight)
1. LIS-MIA-SJO-LIM
2. TPE-KWI-ANK-GVA-OSL
3. YMQ-WAS-PTY-SCL
4. FNJ-SOF-DUB-MAN
5. BNE-AKL-LAX-BOS
6. RIO-NBO-DXB-ULN
7. BOM-CAI-DKR-HOU-SFO
8. HKG-BJS-WAW-BCN-CAS
9. TYO-SEA-ATL-MAD-VIE
10. LIM-BOG-MSY-CHC

IMPLEMENTATION PLAN
The topic will entail 2 hours theory and 1 hour for practice.

2.9 FURTHER READING

1. Gwenda .S. & Jane .A. (2003) Manual of Travel Agency Practices, 3rd ed. Butterworth-
Heinemann.
2. World travel Atlas.
WEEK 3

TOPIC 3: CURRENCY RULES AND ROUNDING PROCEDURES

3.1 INTRODUCTION
The topic will deal with the various currency rules such as converting neutral units of
construction to local currency fares and vice versa. You will also learn how to round the
resulting local currency fares. This topic is essential as it becomes complex to compute fares in
different currencies. Therefore, the need to have a standard unit of currencies to facilitate easier
addition or comparison of fares. International fares are published in the local currency fare
which normally in the national currency of where the international journey starts from. In order
to work with different currencies, there is a standard unit for fares which is known as neutral unit
of construction. The fare construction is initially done by use of NUC and then converted to
local currency fare. The conversion is done by use of IATA rate of exchange.

3.2 OBJECTIVES
By the end of the topic, you should be able to:
• Understand how to use the neutral units of construction
• Apply appropriate currency conversion procedures
• Differentiate between the two types of rounding procedures

3.3 GLOSSARY
• NUC- it is the neutral unit of construction
• Currency of Country of Payment – the currency in which international fares from that
country are dominated.
• IATA Rate of Exchange (IROE): the rates of exchange notified by IATA to convert local
currency fare to NUC and to convert total NUC amounts to the currency of the commencement
of transportation.

3.4 CURRENCY RULES

Local Currency Fares

This is the national currency of the country of commencement of the international journey.

NUC Conversion Procedure

Neutral unit of construction (NUC) is a standard unit for fares that have been derived from each
of the local currencies.
• To convert the local currency fares into NUC, divide the LCF by IROE. For example KES
into NUC
NBO BOM KES 20,000
IROE 74.300000 (based on the country of commencement of the journey)
20000/74.300000= NUC 269.17
NUC are not rounded off. They are expressed into two decimal places only, ignoring any further
decimal.

• To convert NUC into local currency, multiply NUC by IROE

Example
NUC into New Zealand Dollar;
Auckland (AKL) – Singapore (SIN) Y NUC 1893.61*IROE 1.463335 (based on COC New
Zealand) =NZD 2771.00

3.4.1 Rounding Local Currency Fares

Rounding of local currencies is done by use of two main ways known as full adjustment or half
adjustment. Full adjustment means you round to the next higher unit. Half adjustment means
you round off to the nearest unit. For instance, the US dollar is rounded to the N1, in this case
take half of the unit which is 0.5 and if the next decimal after that unit is 0.5 and higher, then
round up to the next higher unit. E.g. USD 120.8 becomes USD 121.00. However, if the
decimal after that unit is less than half, round down e.g. USD 120.3 becomes USD 120.00.

In this course N represent nearest unit while H represent higher unit.

The IATA rate of exchange table is attached as appendices.
Illustration 1:
Raw LCF Rounding Unit Rounded LCF
NZD 1234.09 Higher 1 NZD1234.00
NZD 1234.3 H1 NZD 1235.00
NZD 1234.9 H1 NZD 1235.00
NZD 2209.8 H1 NZD 2210.00

Illustration 2:
Raw LCF Rounding Unit Rounded LCF
USD 1234.39 Nearest 1 USD 1234.00
USD 1234.09 N1 USD 1234.00
USD 1234.90 N1 USD 1235.00
USD 2299.87 N1 USD 2300.00

3.5 TOPIC SUMMARY

Local currencies are in the currency of the country of commencement of international travel with
an equivalent in NUC. After calculating the fares in NUC, you convert this NUC total to the
Local Currency fare at the IATA rate of exchange. NUCs are not rounded but expressed into
two decimal places, while local currencies are required to be rounded. They are basically two
types of rounding known as full and half adjustment.
3.6 ASSESSMENT/ACTIVITY
Round the following currencies given their rounding units:

RAW LCF ROUNDING UNIT ROUNDED LCF

1 USD 39.90 N 0.1
2 USD 39.97 N 0.1
3 JOD 2209.98 H 0.1
4 INR 1230.09 H5
5 INR 1232.3 H5
6 CAD 2790.9 N1
7 ZAR17199.96 H10
8 AUD 1151.2 H1
9 KRW 2183124.8 H100
10 EUR 4955.99 H1

3.7 IMPLEMENTATION PLAN

The topic will entail 2 hours theory and 1 hour for practice.

3.8 FURTHER READING

www.pat.aero
PAT General Rules Online
WEEK 5

TOPIC 4: FARE CONSTRUCTION

4.1 INTRODUCTION
This topic will deal with the various steps involved in constructing airfares. The major method
used in calculating airfares known as point to point and mileage principles will be covered. The
mileage principle involves a number of steps such as measuring distances between points and
comparing fares to/from intermediate cities to get the correct through fare. Through fare is the
applicable fare for travel between two consecutive fare construction points via an intermediate
point(s). The basic elements of a mileage system are;
▪ Maximum permitted mileage (MPM)
▪ Ticketed point mileage (TPM)
▪ Extra Mileage Allowance (EMA)
▪ Excess Mileage surcharge (EMS)

The mileage system is also accompanied by the following fare checks;

▪ Higher intermediate point check (HIP)
▪ One way backhaul check (BHC)
The topic will also give the complete practical experience on how to calculate the basic one way
trips and return trips.

4.2 OBJECTIVES
By the end of the topic, you should be able to;
▪ Apply the point to point fare calculation
▪ Apply the various elements of the mileage system
4.3 GLOSSARY
Maximum Permitted Mileage (MPM):
Maximum distance published between the origin and the destination of a fare component.
Ticketed Point Mileage (TPM):
The distance between pairs of points published in the TPM manual using nonstop sector
mileages
Extra Mileage Allowance (EMA):
TPM deduction or a bonus give between a given fare component
Excess Mileage Surcharge (EMS):
Surcharge imposed incase the TPM is more than the MPM and the EMA is nil or insufficient

4.4 Fare Calculations Techniques

There are basically two major fare construction techniques known as;
a) Point to Point
b) Mileage System

4.4.1 POINT TO POINT

The point to point is a direct route that entails getting the Neutral Unit of Construction for the
sector and multiplying it by the IATA rate of exchange in order to convert it to local currency
fare.

FCP Identify the fare construction points such as the origin and
destination of the fare component
NUC Quote the fare in Neutral Unit of Construction from the origin to
the destination following the right global indicator, fare type and
carrier code
RULE Identify the rule number if any and follow relevant conditions if
any
AF Determine the applicable fare in NUC which is the result of
 above steps
IROE 1. Multiply the NUC total by the IATA rate of exchange based
on the country of commencement of the international travel.
2. Drop trailing zeroes if any.
LCF 1. Round the resulting local currency fares.
2. Show the exact number of decimal places required for the
country.

Illustration 1:
TUN CARRIER CL
TYO JL Y
FARES IN NUC
TUN-TYO Y OW 2715.75

FCP TUN TYO

NUC Y OW 2715.75
RULE NIL
POINT TO POINT
AF NUC 2715.75
IROE 1.456340
LCF TND 3955.055 ~N0.5 Decimal Units 3
LCF TND 3955.000

Automated Ticket
23OCT12TUN JL TYO2715.75NUC2715.75END IROE1.456340
4.4.2 MILEAGE SYSTEM

Through fare is the applicable fare for travel between two fare construction points via
intermediate point(s). This requires the use of the mileage principals, using the following
formula to calculate one way trips;

FCP Identify fare construction points of the fare component

NUC Quote the Neutral Unit Of Construction from fare component origin to
destination based on global indicator, fare type and carrier.
RULE Identify the condition of the rule
MPM Note the maximum permitted mileage between the origin and the
destination of the fare component
TPM Add up the ticketed point mileages and compare the sum with the
MPM.
EMA If the total TPM exceeds the MPM, look for an Extra Mileage
Allowance.
EMS If the EMA is nil or insufficient, determine the Excess Mileage
Surcharge by dividing TPM by MPM.
HIP Look for a Higher Intermediate Point fare from.
▪ Component origin to intermediate stopover
▪ Intermediate stopover to another
▪ Intermediate stopover to component destination
RULE Apply any HIP rule where applicable
AF Determine the resulting applicable fare in NUC
CHECK Apply any other check applicable for the routing such as Backhaul
check.
TOTAL Get the total result of all the above steps in NUC.
IROE Multiply by IATA Rate of Exchange based on country of
commencement.
LCF 1. Round the resulting local currency fare
2. Show extra number of decimals required.
Fare Construction Points
This is the origin and the destination in a given routing. For example, ATL-X/PAR-GVA-FRA
in this case the FCP is ATL FRA

4.5 MAXIMUM PERMITTED MILEAGE (MPM)

This is the first element in the mileage system. It is the maximum distance in air miles that a
passenger is allowed to travel between the origin and the destination of a fare component.

When selecting the correct MPM, it is important to establish the right global Indicator for the
routing.

ILLUSTRATION 1:

JOURNEY
ATL TPMS CARR. CL
X/PAR 4386 AA C
GVA 249 AF
FRA 287 SR
FARES IN NUC
ATL-FRA COW 2902.00 MPM 5527 AT

FCP ATL FRA

NUC COW2902.00
RULE NIL
MPM 5527 AT
TPM 4922
EMA NA
EMS M
HIP NIL
RULE NIL
AF 2902.00
CHECK BHC NA
TOTAL NUC 2902.00
IROE 1.000000
LCF USD 2902.00~ N1 Decimal units 2
LCF USD 2900.00

AUTOMATED TICKET
23OCT12ATL AA X/PAR AF GVA SR FRA M2902.00NUC2902.00END
IROE1.000000

4.6 TICKETED POINT MILEAGE (TPM)

This is the actual distance covered in a journey. It represents the shortest operated mileages
between the ticketed points of a journey.
ATL TPMS CARR. CL
X/PAR 4386 AA C
GVA 249 AF
FRA 287 SR

From the above, the distance in each sector is what is considered as the TPM. Therefore, while
constructing the fare, you will be required to get the total TPM, which is 4386+249+287= 4922
miles
WEEK 6
4.7 EXTRA MILEAGE ALLOWANCE (EMA)
EMA is a TPM deduction or a published bonus mileage that is deducted from the total TPM.
Such mileage deduction depends on the type of routing, the origin/destination and intermediate
points of the fare component. After deducting the applicable EMA from the TPM, the reduced
TPM is compared again with the MPM to determine whether or not the routing is within the
mileage. Refer to the EMA table attached as an appendix.

ILLUSTRATION: 2
JOURNEY
AMS TPMS CARR. CL
X/OSL 571 SK Y
BGO 188 BU
FARES IN NUC AMS-BGO YOW 680.87 MPM 663 EH

FCP AMS BGO

NUC YOW 680.87
RULE NIL
MPM 663
TPM 759 NEW TPM 609
EMA 150 (E/XXX)
EMS M
HIP NIL
RULE NIL
AF 680.87
CHECK BHC NA
TOTAL NUC 680.87
IROE 0.916389
LCF EUR 623.941 ~ N 0.01Decimal Units 2
LCF EUR 623.94

AUTOMATED TICKET
23OCT12AMS SK X/OSL BU BGO E/XXX M680.87NUC680.87END IROE0.916389

In the above illustration the TPM is more than the MPM. In such a case you need you check for
TPM deduction (EMA). The TPM deduction for the routing is 150, thus reducing the TPM to
609. Once you obtain the new TPM, you need to compare it with the MPM. The journey is now
within mileage because the new TPM is less than the MPM.
NB E/XXX indicates that there is a TPM deduction in the journey which is open to any
intermediate via point.

4.7.1 Assessment/Activity
Determine the applicable EMA or TPM deduction if any, for the following itineraries (with
stopover at all ticketed points)? Write none if there is no allowance applicable. Indicate also
the ticket entry where applicable.

FARE COMPONENT ROUTING EMA TICKETING ENTRY

EXMP. BUD-IST-TLV -100 E/XXX

1. ISB-KHI-AMM-CAI

2. NCE-PAR-GVA-ZRH

3. MIA-TLV-CPT

4. AKL-HNL-LAX

5. YVR-YMQ-NYC-CAS
4.8 EXCESS MILEAGE SURCHARGE (EMS)
EMS is a surcharge imposed in a fare incase the EMA is not applicable or insufficient. The
surcharge ranges from 5-25% and is determined by a simple formula. Divide the TPM by the
MPM.

If the result is: surcharge the fare by:

Over 1.00000 but not higher than 1.05…………………………………………… 5%
Over 1.05000 but not higher than 1.10…………………………………………… 10%
Over 1.10000 but not higher than 1.15…………………………………………… 15%
Over 1.15000 but not higher than 1.20…………………………………………… 20%
Over 1.20000 but not higher than 1.25…………………………………………… 25%

When using this formula check up to five decimal places.

Illustration 3
DUB TPM CARR. CL
DUS 568 Y
PAR 254
VIE 647
ATH 793

FCP DUB ATH

NUC Y OW 729.12
RULE NIL
MPM 2137
TPM 2262
EMA NIL
EMS 10M
HIP NIL
RULE NIL
AF +10% 729.12= 802.03
CHECK BHC N/A
TOTAL NUC 802.03
IROE 1.123522
LCF EUR 901.09~H1 Decimal units 2
LCF EUR 901.00

The example above indicates that there was no TPM deduction (EMA) hence an Excess Mileage
Surcharge of 10% was applied.
WEEK 7

4.9 Higher Intermediate Point (HIP)

HIP is a fare component check which ensures that the fare in NUC from the fare component
origin is not lower than the NUC from/to any intermediate ticketed point in the same component.
When applying this check, look for an NUC that is higher than the origin-destination following
the direction of the fare component, that is,
• From the origin to any intermediate stopover point.
• From intermediate stopover to another intermediate stopover point.
• From an intermediate stopover point to the destination of the fare component.

Illustration 4:
Itinerary: Johannesburg-SA-Dubai-EK-Tel Aviv-SV-Montreal-AC-New York

Class: Economy

TPM: JNB-DXB 3984, DXB-TLV 1254, TLV-YMQ 5467, YMQ-NYC 388

Fares Y OW in NUCs MPM

JNB-DXB 875.25 4826
JNB-TLV 678.44 4854
JNB-YMQ 2004.03 9986
JNB-NYC 2004.03 9580
DXB-TLV 325.20
DXB-YMQ 2135.73
DXB-NYC 2075.08
TLV-YMQ 2323.00
TLV-NYC 2246.00
FCP JNB NYC
NUC YOW 2004.03
RULE NIL
MPM 9580
TPM 11093 NEW TPM 10433
EMA -660 E/TLV
EMS 10M
HIP DXB NYC 2075.08
RULE NIL
AF +10% 2075.08=2282.58
CHECK BHC N/A
TOTAL NUC 2282.58
IROE 7.804100
LCF ZAR 17813.48~ H10 DP 0
LCF ZAR 17820

HIP CHECK
Origin- intermediate stopover(s)
JNB-DXB 875.25
JBN-TLV 678.44
JNB-YMQ 2004.03
Stopover – stopover(s)
DXB-TLV 325.00
TLV-YMQ 2135.73
Stopover(s)-Destination
DXB-NYC 2075.08
TLV-NYC 2323.00
AUTOMATED TICKET
23OCT12JNB SA DXB EK E/TLV SV YMQ AC NYC10M DXBNYC2282.58NUC
2282.58END IROE7.804100

If the EMA via city is specified, the E/ the city is indicated at point where the city
appears in the itinerary. On the other hand, if it is not specified, use E/XXX after the last city in
the itinerary.

4.10 BACKHAUL CHECK (BHC)

BHC is applied when there is a HIP from origin to a stopover point in a One Way journey. It is a
one way fare component that has a fare from the origin to an intermediate stopover point which
is higher than the fare from the origin to the destination. The check would require the use of the
backhaul formula;

HI NUC Origin to Intermediate stopover point

LO NUC Lower fare from origin to destination
____________________________________________________________
= BHD Backhaul difference
+ HI NUC Origin to intermediate stopover point
____________________________________________________________
= OWM One way minimum fare in NUC

Compare the One way minimum (OWM) NUC to the Applicable fare (AF) NUC
➢ If OWM > AF: deduct the AF from the OWM to obtain the backhaul plus (p). Add this plus
(p) to the AF to increase the constructed fare to the same amount as the OWM fare.
➢ If the AF > OWM: ignore the OWM and continue with AF NUC.

Exceptions for BHC application

➢ Journey wholly between South Atlantic area and area 2
➢ Journey entirely within TC1
➢ Journeys wholly within Europe

ILLUSTRATION: 5
JOURNEY
CAI TPMS CARR. CL
AMS 2042 KL Y
LON 2187 BA
PAR 220 AF

FARES IN NUC
CAI- AMS YOW 708.61 MPM 2565 EH
- LON 774.89 2672
- PAR 708.61 2419

FCP CAI PAR

NUC YOW 708.61
RULE NIL
MPM 2419
TPM 2407
EMA NIL
EMS M
HIP 774.89 (CAI LON)
RULE NIL
AF
CHECK BHC
HI CAI LON 774.89
-
LO CAI PAR 708.61
= BHD 66.28
 + HI CAI LON 774.89
_______________________________
OWM FARE 841.17 OWM >AF
Compare AF 774.89
_______________
P 66.28
TOTAL NUC 841.17
IROE 4.268540
LCF EGP 3590.567 ~ H1
LCF EGP 3591.000

AUTOMATED TICKET
23OCT12CAI KL AMS BA LON AF PAR M CAILON P CAILON
CAIPAR66.28NUC841.17END IROE4.268540

4.11 TOPIC SUMMARY

The mileage principle is applied to all international routings. Under the mileage system, the fare
component is permitted at the direct fare if the MPM is greater than or equal to the total TPM of
the sector in the component. Incase the TPM is higher than the MPM; the next step is to check
for EMA. However, incase the EMA is nil or insufficient, the TPM is divided by MPM to arrive
at an EMS. This surcharge ranges from 5% to 25 %. Automated ticket is used to indicate the
information for the airfare calculation. Consecutive digits and letters should be joined. While
digit or a letter following each other should be separated with an exception of the Hip and
Backhaul Cities.
4.12 ASSESSMENT
You work for ABC travel and Tour Company; two of your clients wish to travel to Karachi
from Nairobi. The first client would like to have a stopover in Addis Ababa and the second
client wish to take the trip without stopover.

Required
Calculate the lowest applicable normal fares in NUCs for their journey
Itinerary Nairobi-KQ-Addis Ababa-ET-Karachi
Fare Type C
TPM NBO-ADD 725, ADD-KHI 2303
FARES NBO- ADD COW 362.00 EH MPM 870 EH
KHI 524.00 EH 3522 EH
ADD-KHI 568.00 EH 2764 EH

IMPLEMENTATION PLAN
The topic will entail 4 hours theory and 5 hours for practice

4.13 FURTHER READING

1. IATA (2008). International Travel and Training programme. (5.9 edition), Montreal- Canada.
2. Extra Mileage Allowance Table
WEEK 8

TOPIC 5: RETURN TRIPS FARE CONSTRUCTIONS

5.1 INTRODUCTION
This topic will gives the complete steps on how to calculate basic return trips with use of two
fare components. It will also show how to select a fare break point. Further, the topic will
show you how intermediate points affect the fare construction steps outcome.

5.2 OBJECTIVES
By the end of the topic, you should be able to:
• Determine fare break points
• Compute round trip fares
• Compute circle trip fares
• Recognize when to change fare break points

5.3 GLOSSARY
Fare break point:
Fare construction points
Circle trip minimum check:
It is check used in circle trip calculation to make sure that the highest point-to-point RT fare is
not undercut by the sum of outbound and inbound fares of a circle trip.
Outbound fare component: The city pairs between the origin and the turnaround point.
Inbound fare component: The city pairs between the destination and the turnaround point.
5.4 Return Trips
You will use the following formula to calculate Return trips

FCP Identify fare construction points of the fare component

NUC Quote the Neutral Unit Of Construction from fare component origin to
destination based on global indicator, fare type and carrier.
RULE Identify the condition of the rule
MPM Note the maximum permitted mileage between the origin and the
destination of the fare component
TPM Add up the ticketed point mileages and compare the sum with the
MPM.
EMA If the total TPM exceeds the MPM, look for an Extra Mileage
Allowance.
EMS If the EMA is nil or insufficient, determine the Excess Mileage
Surcharge by dividing TPM by MPM.
HIP Look for a Higher Intermediate Point fare from.
➢ Component origin to intermediate stopover
➢ Intermediate stopover to another
➢ Intermediate stopover to component destination
RULE Apply any HIP rule where applicable
AF Determine the resulting applicable fare in NUC
STEPS FOR THE ENTIRE JOURNEY
SUBTTL Get the sum of outbound and inbound AF NUCs
CHECK Look for the highest RT NUC from the origin to the highest rated
CTM stopover point in the entire journey.
TOTAL Get the total result of all the above steps in NUC including plus ups.
IROE Multiply by IATA Rate of Exchange based on country of
commencement.
 Drop trailing zeroes, if any.
LCF 3. Round the resulting local currency fare
4. Show extra number of decimals required.

GENERAL GUIDELINES
When calculating fares for return trips:
➢ Apply the mileage system and HIP check on each fare component.
➢ Divide the published RT fare by two to get ½ RT for each fare component. If there is no
published RT, use the OW as the ½ RT fare.
➢ For the fare component which ends in the country of origin, use the fare in the reverse
direction of travel. Hence, each fare component will involve the same city pair. Other fare
component not ending in the COC will take the actual direction of travel.
➢ For HIP check, check the fares in the same direction as the fare component.
➢ Circle Trip (CT) may have two or more fare components.
➢ For CT, apply the Circle Trip Minimum Check.

5.5 SELECTING A FARE BREAK POINT

As a general rule, you break the journey at the farthest point from the origin. In order to identify
the farthest point, you have to measure the distance in terms of the highest MPM. However, any
other point may produce a more favourable fare provided such point has sufficient MPM.
Hence, you break the journey at stopover or at a connecting point.

ILLUSTRATION: 1
JOURNEY
PAR TPMS CARR. CL
RIO 5697 AF F
SCL 1841 RG
MAD 6802 LA
PAR 649 IB
FARES IN NUCS
PAR-RIO FRT 7541.46 MPM 6836 AT
- SCL 8663.44 8958 AT
MAD- RIO 6409.86
- SCL 7539.79

OUTBOUND INBOUND
FCP PAR SCL PAR SCL
NUC F1/2 RT 4331.72 F1/2 RT 4331.72
RULE NIL NIL
MPM 8958 8958
TPM 7538 7451
EMA NIL NIL
EMS M M
HIP NIL NIL
RULE NIL NIL
AF 4331.72 4331.72
CHECK NA
SUB TTL AF 8663.44(RT)
CTM NA
TOTAL NUC 8663.44
IROE 1.123522
LCF EUR 9733.56 ~ (H1)
LCF EUR 9734.00

Automated Ticket
23OCT12PAR AF RIO RG SCL4331.72LA MAD IB PAR
M4331.72NUC8663.44END IROE1.123522
ILLUSTRATION: 2
LON TPMS CARR. CL
FRA 396 BA Y
KRT 2756 LH
LON 3127 SD

FARES IN NUCS
LON- KRT YRT 2337.82 MPM 3835 EH
- FRA 695.18
FRA- KRT 3044.84

OUTBOUND INBOUND
FCP LON KRT LON KRT
NUC Y1/2 RT 1168.91 Y1/2 RT 1168.91
RULE NIL NIL
MPM 3835 POINT
TPM 3152
EMA NIL TO
EMS M
HIP FRA KRT 1522.42
RULE NIL POINT
AF 1522.42 1168.91
CHECK NA
SUB TTL AF 2691.33 (CT)
CTM Lower
TOTAL NUC 2691.33
IROE 0.701187
LCF GBP 1887.12~ (N1)
LCF GBP 1887.00
 AUTOMATED TICKET
23OCT12LON BA FRA LH KRT M FRAKRT1522.42SD
LON1168.91NUC2691.33END IROE0.701187

5.6 Changing the fare break points

The farthest point though having the highest MPM, may be also the highest rated point. In such
cases, you may experiment with an alternative construction point in order to obtain a lower fare.

Illustration 1:
Determine the lowest applicable normal fares for the journey below;

OPTION 1
OUTBOUND INBOUND
FCP NBO BOM NBO BOM
NUC Y1/2 RT 477.00 Y1/2 RT 477.00
RULE NIL NIL
MPM 3384 3384
TPM 3497 POINT
EMA NIL
EMS 5M TO
HIP N/A
RULE NIL POINT
AF 500.85 477.00
SUB TTL NUC 977.85 (CT)
CHECK CTM LOWER
TOTAL NUC 977.85
IROE 1.000000
LCF USD 977.85~ N1
LCF USD 978.00
 OPTION 2
OUTBOUND INBOUND
FCP NBO KHI NBO KHI
NUC Y1/2 RT 447.00 Y1/2 RT 447.00
RULE NIL NIL
MPM 3368 3368
TPM 2953 3364
EMA N/A N/A
EMS M M
HIP N/A NBO BOM 477.00
RULE NIL NIL
AF 447.00 477.00
SUB TTL NUC 924.00 (CT)
CHECK CTM NBO BOM 954.00
-
COMPARE AF 924.00
P 30.00
TOTAL NUC 954.00
IROE 1.000000
LCF USD 954.00 ~ N1 DP 2
LCF USD 954.00

AUTOMATED TICKET

14MAR12NBO EK DXB EK KHI M447.00 PK BOM AI NBO M NBO

BOM477.00P NBO BOM30.00NUC954.00END IROE1.000000
5.7 TOPIC SUMMARY
In this topic you have learnt that in order to construct return trips, you have to select a fare break
point, which is the farthest point from the point of origin. However, you may break at any other
point to obtain the lowest applicable fare in a journey. The HIP check also applies in return
journey and they are checked in the direction of the fare component. CTM check applies in
circle trips to ensure that the highest point- to- point RT fare does not undercut by the sum of
outbound and inbound of a circle trip.

5.7.1 ASSESSMENT /ACTIVITY: 1

Mr. Ian Smith an American citizen wishes to visit Europe on Business. Calculate the lowest
applicable normal fare in local currencies.

Itinerary: CHICAGO-AA-AMSTERDAM-KL-STOCKHOLM-SK-NEW YORK-CO-

CHICAGO.

CLASS F

TPM CHI-AMS 4109, AMS-STO 710, STO-NYC 3917, NYC-CHI 721

FARES IN NUC FRT MPM

CHI-AMS 7622.00 4930 AT

CHI-STO 7272.00 5121 AT
NYC-AMS 8447.00 4366 AT
NYC-STO 8172.00 4700 AT
5.7.2 ASSESSMENT/ACTIVITY: 2
Mr. Isaac Cohen comes to see you at the See-the-World Travel in Santiago. He wishes to spend
several months with his friends in Copenhagen, Amsterdam, Vienna and Lima. He asks you cost
his journey, using the lowest applicable normal fare.

Itinerary: Santiago-LA-copenhagen-SK-X/Brussels-SN-Amsterdam-KL-Vienna-OS-Lima-LA-
Santiago
Class: F
Ticket To be issued and paid for in Chile
Stopovers At all ticketed points, except Brussels
TPM SCL-CPH 8083, CPH-BRU 469, BRU-AMS 98, AMS-VIE 595, VIE-LIM 7097, LIM-
SCL 1527
FARES: SCL-AMS FRT 5221.00 AT MPM 9229 AT
BRU 5221.00 9136
CPH 5681.00 9699
LIM 1168.00 1832 WH
VIE 5372.00 9535
CPH-LIM 7459.00
SCL 9288.45
LIM-AMS 5420.00
BRU 5420.00
CPH 5910.00
SCL 1168.00
VIE 5652.00

IMPLEMENTATION PLAN
The topic will entail 2 hours theory and 2 hours for practice
5.8 FURTHER READING
1. IATA (2008). International Travel and Training programme. (5.9 edition), Montreal- Canada
WEEK 9

TOPIC 6: TICKETING

6.1 INTRODUCTION
In this topic you will be introduced to the various types of traffic documents used in the travel
industry. The topic will emphasis on how these documents are used and the current trends of
their issuance. A detailed procedure will used to demonstrate how to input the required details
before the issuance of traffic documents.

6.2 OBJECTIVES
By the end of the topic, you should be able to:
• Identify the various traffic documents such as;
Electronic Tickets, Miscellaneous Charges Order (MCO) and Multiple Purpose Documents
(MPDs)
• Become familiar with the entries in and the lay-out of traffic documents

6.3 GLOSSARY
Ticket
A document issued by or on behalf of the carrier and includes the conditions of contract and
notices and the flight and passengers coupons contained therein.
Miscellaneous Charges Order
A document issued by a carrier or its agent requesting issue of appropriate Passenger Ticket and
Baggage Check or provision of services to the person named in such document.
Multiple purpose documents
A form used for issuance of interlines accountable traffic documents other than the ticket.
6.4 TRAFFIC DOCUMENTS
Traffic documents constitute tickets, miscellaneous charge order or multiple purpose documents.

6.4.1Tickets
A ticket is a contract where the carrier agrees to transport the passenger and his/her baggage
between the points named on the ticket. The passenger on the other hand agrees to adhere to the
rules of the airline relative to the type of fare he/she has paid for.

Types of Tickets
Manual Tickets-They are multi-copy carbonised tickets printed out by hand.
Automated tickets-They are paper value ticket with computer generated data. Automated
tickets can be categorised as follows;
▪ Transitional Automated Tickets (TAT)-It is issued by airlines.
▪ Off Premise Transitional Automated Tickets (OPTAT) - It is issued by travel agents.
▪ Automated Ticket/Boarding pass (ATB) - It is a single copy non carbonised ticket plus
boarding pass.
Electronic Ticket- It is a paperless ticket. It can be issued instantly over the telephone or
through the web. It is not completely paperless. It consists of the following coupons; Electronic
flight coupon(s), paper audit coupon(s), paper agent coupon(s), paper Itinerary/receipt.
However, the coupon may be in electronic form.
Paper Ticket Coupon
It contains 4 coupons;
Audit Coupon- It is for the account department of the issuing airline. It is removed at the time
of ticket issuance and attached to the sales report.
Agent Coupon- It is for the agency records. It is removed at the ticket issuance and kept the
issuing agent.
Flight Coupon- It is required each time there is a stopover, transfer points, change of carrier or
change of class. The coupons to be used are left in the ticket. Each coupon is valid for the travel
between the points specified in the relevant boxes.
Passenger Coupon- This is the passenger’s copy. It contains details of the trip and it is the
receipt for money paid.

6.4.2 Miscellaneous Charges Order (MCO)

It is issued to cover air transportation and other related services. MCOs are classified into two;

6.4.2.1 Specified MCOs

They are issued for specified transportation or for excess baggage. The specific types of services
are;
▪ Prepaid ticket advice (PTA)
▪ Down payment for air transportation
▪ Deposit for
▪ Additional collection
▪ Taxes on
▪ Extra fare
▪ Hotel accommodation
▪ Penalty fees for rebooking or rerouting
Conditions for Specified MCOs;
▪ It is drawn on a specific carrier
▪ Limited to a specific type of service
▪ Points of departure, destination, class, fare/charge and calculation points are shown
▪ Name of passenger is shown, except when an MCO is issued to cover a PTA in favour of
unknown person or a group.

6.4.2.2 Unspecified MCOs

There are no specific flight details shown and may be issued for further transportation/or excess
baggage for refund. It is mainly issued by the airline.

6.4.3 Multiple Purpose Document (MPD)

It is an excess baggage ticket, special service ticket, tour order, Passenger ticket advice, MCO
and agents refund voucher all rolled into one. Thus, it can be used for manual and interline
accountable traffic documents other than the ticket
6.5 TOPIC SUMMARY
In this topic you have learnt that there is various traffic documents used in the travel industry.
The traffic documents are known as tickets, MCOs and MPDs. These documents can be in
various forms, which are manual, automated and electronic.

6.6 GROUP DISCUSSION

Getting people to change in the corporate environment is often difficult, especially when that
change involves new technology. For many, the idea of online booking and an electronic ticket
is revolutionary. They like the comfort of talking to a travel agent and the confirmation of a
paper ticket. The idea of going to the airport without a ticket is unnerving. “You have no idea,”
reports one exacerbated travel professional, “how many times I am asked, ‘What if my name
isn’t in the computer?”
1. Discuss the potential problems when using internet tickets.
2. Discuss the benefits offered by E-ticketing as opposed to paper ticket.

IMPLEMENTATION PLAN
The topic will entail 3 hours theory and 3 hours for practice

6.7 FURTHER READING

Mohinder, C. (2003). Travel Agency Management: An introductory Text, Anmol publications:
New Delhi
WEEK 10

TOPIC 7: METHODS OF TICKET PAYMENT

7.1 INTRODUCTION
In this topic you will learn how passengers pay for their tickets. The airline and travel agents
give their passengers the privilege of charging the payment of the ticket and other traffic
documents to their credit cards. There also other methods used for payments of tickets such as
electronic and cheque payments.

7.2 OBJECTIVES
By the end of the topic, you should be able to:
• Understand the various modes of traffic documents payments
• Identify and collect applicable taxes, fees and charges

7.3 GLOSSARY
Credit cards
A card that identifies its owner as one who is entitled to credit when purchasing goods and
services from establishments which include travel agencies and airlines.

Universal Air Travel Plan (UATP)

A mode of payment that facilitates the sale of air transport and related services on a credit basis
using Air Travel Cards.
7.4 Methods of Ticket Payment
Traffic documents can be paid for by use of cash, universal air travel plan, credit cards, cheques
or electronically.

7.4.1 UNIVERSAL AIR TRAVEL PLAN (UATP)

Universal Air Travel Plan (UATP) is the world’s first corporate travel payment system owned
and operated by the airline industry. It is designed to provide maximum benefit to the carrier
that issue and accept it. UATP cards are issued by most of the world’s major airlines directly to
their corporate customers and are accepted by over 180 carriers around the world as a form
payment for the purchase of air and rail tickets. It is designed exclusively for corporations
which represent the carriers most important and lucrative market and can be used by individual
business travellers, corporate travel departments and travel agents.

Membership in the UATP is open to all scheduled passenger air and rail carriers. There are two
types of members:
• Ticketor members that accept the UATP card as a form of payment.
• Contractor members that issue the UATP card and accept it from other contractors as a form
of payment.

7.4.2 NEW UATP CARDS

UATP now provides several options designed to allow maximum flexibility and choice for the
corporate accounts:
• Lodged cards offer the advantage of a card- less account that allows corporations to control
travel costs and simplify the accounting process.
• Walking cards give individual travellers a means to purchase air tickets from carriers or travel
agents from their office or while on the road.
• Co-branded cards can be used for charging the airfare, all other travel and entertainment
expenses.

7.4.2.1 INTERNATIONAL CARD

This card is identified by the colour green and by the embossed code “W” (meaning worldwide).
This may be honoured anywhere in the world for purpose of worldwide air transportation and
related services.
7.4.2.2 NORTH AMERICAN CARD
This type of air card is similar to an international card but is identified by the embossed letter
“N” and the colour red. This may be honoured anywhere in the world to purchase air
transportation and related services only between the points in the united states (including Alaska
and Hawaii), Canada, Greenland, Mexico and Central America as far as South including
Panama, Bermuda, Bahamas and Caribbean islands.

7.4.2.3 AIRPLUS CARD

It is accepted for air transportation except charters, excess baggage charges, baggage ship by
cargo, applicable surcharges and taxes.

7.5 COMMERCIAL CREDIT CARDS

Commercial credit cards are also widely used for payment of passenger tickets and other traffic
documents. These cards are assigned a prefix of two alpha codes as well as numeric codes. For
example;
• Travel and Entertainment Cards
a. American Express-AX
b. Dinners Club-DC
• Banking Industry cards
a. Visa International - VI
• Merchandising and banking cards
a. Discover Card- DS
• Commercial company credit cards
a. MasterCard-CA
b. Eurocard-EC

7.6 PRE-PAID TICKET ADVICE

This is an accountable Airline Reporting Corporation (ARC) document that is used to purchase
air travel at a travel agency in one city and the airline issues the ticket for the passenger in a
different city. PTA also can also be used to pay extra baggage charges and incidental expenses
directly related to the flight(s) covered on the PTA.
7.7 TOPIC SUMMARY
A credit card is a card that identifies its owner as one is entitled to credit when the purchasing
goods or services from establishments which include travel agencies and airlines. The Universal
Air Travel Plan facilitates the sale of air transportation and related services on credit basis. Aside
from the UATP cards, commercial credit cards are also widely used for payment of passenger
tickets and other traffic documents. The other form of payment of air ticket is known as pre paid
ticket advice.
WEEK 11

TOPIC 8: TAXES, FEES AND CHARGES

8.1 INTRODUCTION
Different taxes, fees and other charges are also included in the ticket cost. These taxes are
imposed by the government and they vary from country to country. Various Taxes, fees and
charges (TFCs) perform different functions, depending on the responsibilities expected by the
enacted government. Each TFCs is used to offset expenses incurred by the various government
agencies in performing a variety of services ranging from customs inspection, immigration
inspection, agricultural plant and health inspection, airport development and improvement
charges and passenger facility charges. Although government imposing a TFC cannot make the
collection mandatory on traffic documents issued, airlines have to collect the TFC from the
passengers at the traffic document issuance to avoid fines for non-collection of TFCs.

8.2 OBJECTIVES
By the end of the topic, you should be able to:
• Understand the different types of TFCs
• Identify and collect applicable TFCs
• Choose appropriate procedures in converting and rounding TFCs

8.3 TYPES OF TAXES, FEES AND CHARGES (TFCs)

There are many types of TFCs collected at the time of ticket issuance. They can be classified as:
• Departure TFCs
These are taxes collected during ticket issuance for each departure from a point in the taxing
country. They may be for domestic or international travel depending on the tax specifications.
• Arrival TFCs
These are imposed for arrival at a particular city or country. They may include immigration
inspection and customs inspection costs, or other type of service rendered to process passenger
arrivals in such countries.
• Sale Tax
This is a local tax usually assessed as a percentage of the fare and is collected locally in the
taxing country at the time of traffic document issuance.
• Ticket Tax
It is a tax imposed on issuance of a ticket.

8.4 TFC Identification

To be able to quote the total cost on the ticket, you need to examine the TFCs to be collected for
each ticketed point on the itinerary.
Example 1: Journey:
SYD
NYC
Step 1: list the country of departure and identify the corresponding departure TFCs.
The following TFCs apply as departure taxes from Sydney. These are listed below:
• Passenger Movement Charge (SYD) 38.00 AU
• Safety and security Charge (WG) (SYD) 3.09 WG
• Passenger Service Charge (WY) (SYD) 21.37 WY
Step 2: List the country of arrival and look for the corresponding arrival TFCs
• United States:
But, after reading the provisions of each, you would discover that the applicable arrival TFCs
include:
• International transportation tax: USD 15.10 US
• US customs user fee: USD 5.50 YC
• US federal inspection fee/immigration user fee: USD 7.00 XY
• US APHIS: USD 5.00 XA
Step 3: Find out if there are any sales or ticket TFCs
For the countries in our sample journey there are none applicable.
8.5 General Conversion Procedures
After identifying the applicable TFCs by country and by type, convert all these taxes into the
currency of the country of payment.
Step 1: Convert TFCs into the currency of the country of payment at the Bankers Selling Rate
(BSR). Unlike the IATA Rate of Exchange, BSRs change every week if not daily.
Step 2: Round the resulting amount according to the instructions listed in IROE table under
“Other Charges”.
Step 3: Add the TFCs to the equivalent fare paid to obtain the overall ticket total. If there is no
equivalent fare paid, then add the TFCs to the fare to get the total amount to be paid by the
passenger.

For example, assuming that the current BSR is 1 USD =0.63449 AUD, then we convert each of
the US arrival TFCs as follows:
• International transportation tax (US):
USD 15.10 *0.63449=9.580 ˜ (H 0.1) AUD 9.60 US
• US customs user fee (YC):
USD 5.50 * 0.63449 = 3.48 ˜ (H 0.1) AUD 3.50 US
• US federal inspection fee (XY):
USD 7 * 0.63449 = 4.44 ˜ (H 0.1) AUD 4.50 XY
• US APHIS (XA):
USD 5.00 * 0.63449 = 3.17 ˜ (H 0.1) AUD 3.20 XA

• This topic will only deal with TFCs related to issuance of traffic documents. For such TFCs,
refer to the appendices at attached at the end of the module.
7.5 SUMMARY
In this topic you have learnt that there are different TFCs collected at ticket issuance and they
vary from country to country. The TFCs can be classified as:
• Departure TFCs
• Arrival TFCs
• Sales Tax
• Ticket Tax
For TFCs not expressed in the currency of payment, convert the banker’s selling rate (BSR).

IMPLEMENTATION PLAN
The topic will entail 2 hours theory and 2 hours for practice

7.6 ASSESSMENT/ACTIVITY
Refer to the Passenger Air Tariff (PAT) extract attached as appendices and determine the Taxes,
fees and other charges where applicable for the following routings.
1. CPH-MIL-ATH-HAM-CPH
2. LON-MIL-PMO-TUN-FRA-LON
3. HKG-SGN-DEL-BOM-KTM-HKG
4. GVA-VIE-NBO-LOS-GVA
5. CAI-MNL-TPE-BKK-CAI
6. DPS-SYD-NOU-AKL-SYD-DPS
7. PAR-CCS-CUR-KIN-MIA-NYC-PAR
8. SCL-CCS-LCA-JED-CAI
9. VLL-BCN-ACC—ABJ
10. MRU-DAM-BRU-FRA-CPH
7.7 REFERENCES/FURTHER READING
www.UATP.COM
Universal Air Travel Plan
www.pat.aero
WEEK 12

TOPIC 8: GLOBAL DISTRIBUTION SYSTEMS

8.1 INTRODUCTION
The topic covers the various reservations systems used in the travel industry. The airline
industry was the pioneer in the adoption of ICTs in the travel industry. The American Airlines in
collaboration with the International Business Machine (IBM) developed the first airline
computer reservation system in 1953 which was known as SABRE. The CRSs were then
developed into GDSs. Strategic alliances, consolidations, mergers and interrelationships
between CRSs resulted into four major GDS-Sabre, Worldspan, Amedeus, and Galileo. The
success of CRS and GDS paved way for the internet. Other ICTs that have emerged include;
mobile technologies and call centres.

8.2 OBJECTIVES
By the end of the topic, you should be able to:
• Understand the various reservation systems and other information systems used in the travel
industry.
• Learn issues and trends of GDSs
• Use an information system to issue a ticket.

8.3 GLOSSARY
Global Distribution System (GDS)
A worldwide computerized reservation network used as a single point of access for reserving
airline seats, hotel rooms, rental cars, and other travel related items by travel agents, online
reservation sites, and large corporations.

Information and Communication Technology (ICT)

An umbrella term that describe all technologies for the manipulation and communication of

information.

8.4 Types of GDS

Global Distribution System (GDS) is a term used to describe the large and sophisticated
electronic travel reservation systems currently in use throughout the world. There are currently
four major GDS systems in operation – Amadeus, Galileo, Sabre and Worldspan.

8.4.1 Amadeus

Founded in 1987 by Air France, Iberia, Lufthansa, and SAS, Amadeus is the youngest of the
four GDS companies. Amadeus is a leading global distribution system and technology provider
serving the marketing, sales, and distribution needs of the world’s travel and tourism industries.
Its comprehensive data network and database, among the largest of their kind in Europe, serve
more than 57,000 travel agency locations and more than 10,500 airline sales offices in some 200
markets worldwide. The system can also provide access to approximately 58,000 hotels and 50
car rental companies serving some 24,000 locations, as well as other provider groups, including
ferry, rail, cruise, insurance, and tour operators.

Upon its inception, Air France, Iberia, Lufthansa and SAS held equal shares of Amadeus Global
Travel Distribution S.A. Shortly after the formation of the company, however, SAS sold its
shares to Amadeus Data Processing. The three founder airline shareholders currently hold
59.92% of the company: Air France (23.36%), Iberia (18.28%), and Lufthansa (18.28%).
Remaining shares are held publicly.
As the youngest of the four GDS companies, Amadeus has done remarkably well during its short
tenure. Yet, in many ways, the company remains an anomaly. Amadeus has the greatest number
of travel agency locations with the highest productivity per terminal in the world, yet its booking
share is Number 3, and its revenues are dwarfed by Sabre and, to a lesser degree, by Galileo.
While the company is Number 1 in locations worldwide, serving the greatest number of
countries, it provides the fewest U.S. destinations of the top four GDSs. As with its competitors,
the future for Amadeus will continue to be linked to the technological and structural changes that
are revolutionizing the travel industry. Amadeus appears to be adapting well (albeit cautiously)
to the shift of business to the Internet. Having acquired e-Travel, Inc. from Oracle Corporation in
July of 2001, Amadeus now has a new business unit dedicated to delivering solutions to e-
commerce players worldwide. The e-Travel solutions integrate all components of a managed
travel program into a single Internet-based service that enables travelers to book air, car, hotel,
and rail services, all within corporate guidelines. With its strong company infrastructure
worldwide, impressive product set, and growing customer base, Amadeus is one of the most
significant players in shaping the future of the GDS.

8.4.2 Galileo International

Galileo is a global distribution system referred to in the industry as a GDS or a CRS (computer
reservation system). A GDS is used by travel agents to instantly confirm reservations for their
customers for airline seats, hotel rooms, car hire and much more.

Galileo International was founded in 1993 by 11 major North American and European airlines:
Aer Lingus, Air Canada, Alitalia, Austrian Airlines, British Airways, KLM Royal Dutch
Airlines, Olympic Airlines, Swissair, TAP Air Portugal, United Airlines, and US Airways. It is a
major player in the GDS business throughout the world: North America, Europe, the Middle
East, Africa, and the Asia/Pacific region. Galileo International is a diversified, global technology
leader. Its core business is providing electronic global distribution services for the travel industry
through its computerized reservation systems, leading-edge products and innovative Internet-
based solutions. Galileo is a value-added distributor of travel inventory dedicated to supporting
its travel agency and corporate customers and, through them, expanding traveler choice.
In 1997, Galileo International became a publicly traded company, listed on the New York and
Chicago Stock Exchanges. In October of 2001, Cendant Corporation acquired Galileo
International for approximately $1.8 billion in common stock and cash. Currently, the company
is represented in 116 countries, and serves travel agencies at approximately 45,000 locations.
Other travel suppliers include 500 airlines, 227 hotel companies, 33 car rental companies, and
368 tour operators.

Galileo’s competitive strengths include market share, well-balanced and global presence,
relationships with diverse groups of travel vendors, technologically advanced information
systems, highly skilled personnel, and a stable product line. Compared to other GDS companies,
Galileo is a cautious follower when it comes to technology. However, in response to the growing
demand of web-based travel, the company has established successful relationships with entities
such as Go, UK’s best low-cost airline; subsidiaries such as Highwire, Inc., providing Internet-
based tools and services to the corporate travel market; and Sheperd Systems, an industry leader
in the provision of sales and marketing intelligence systems and services within the travel
industry. Additionally, Galileo has sponsored membership to the THOR Worldwide Negotiated
Hotel Rates Program, and has a state-of-the-art development center supplying information and
systems support to travel agencies operating more than 178,000 computer terminals, all of which
are linked to the Galileo’s Data Center. Galileo’s primary weakness, its singular focus on the
distribution side of the business, is also its perceived strength. Based on its competitive strengths,
Galileo is pursuing a strategy that includes expanding its global distribution, strengthening
customer loyalty, leveraging technology, and capitalizing on opportunities created by increasing
Internet use. Galileo sees the GDS industry as having the ability and potential to provide
electronic distribution and many components of e-commerce to other industries, and is utilizing
its strengths to provide expanding services to its growing customer base.

8.4.3 Sabre

For more than 40 years, Sabre has been developing innovations and transforming the business of
travel. From the original Sabre computer reservations system in the 1960s, to advanced airline
yield management systems in the 1980s, to leading travel web sites today, Sabre technology has
traveled through time, around the world, and has touched all points of the travel industry. In July
of 1996, Sabre became a separate legal entity of AMR (parent company of American Airlines),
followed by a successful initial public offering in October in which AMR released approximately
18% of its shares to be publicly traded. Sabre, represented in 45 countries, is a leading provider
of technology for the travel industry and provides innovative products that enable travel
commerce and services, and enhance airline/supplier operations.

Headquartered in Southlake, Texas, Sabre connects more than 60,000 travel agency locations
around the world, providing content from approximately 400 airlines, 55,000 hotel properties, 52
car rental companies, 9 cruise lines, 33 railroads, and 229 tour operators. In addition to being one
of the leading GDS companies, Sabre also provides a broad range of products and services that
enhance travel agency operations and their ability to serve the traveler.

Sabre-connected travel agencies use Sabre web- based technologies and low-fare finding
solutions to create new sales opportunities, drive operational efficiencies, and improve customer
service. Among the company’s recent innovations is Sabre Virtually There, a personalized web
site service that automatically gives travelers up-to-the-minute details about itineraries, while
also providing a wealth of information about their destinations. Sabre owns Travelocity.com, the
industry’s leading online consumer travel web site. In 2001, Travelocity.com’s 32 million
members used the site, generating more than $300 million in revenues. Travelocity.com offers
innovative technologies that help consumers find the best air, car, hotel, and vacation
reservations. Sabre also owns Get There, a provider of web-based corporate travel procurement,
including the purchase of air, hotel, car, and meeting planning services. Customers include more
than 800 leading corporations.

Sabre’s competitive strengths include market position, global reach, stable product line,
diversification of revenue streams, and intellectual capital. The Sabre business model is a strong
one, and continues to make significant progress in advancing both its electronic travel
distribution and its information technology solutions businesses. Revenues have been growing
steadily, and the company has embarked on a strategy that fully embraces diversification of its
customer base and revenue streams. Sabre is considered to be one of the most significant and
competitive GDSs due to the fact that it anticipates and takes advantage of the changes in the
information economy and develops innovative practices, leveraging both human resources and
technology systems.

8.4.4Worldspan

Founded February 7, 1990, Worldspan was originally owned by affiliates of Delta Air Lines,
Inc., Northwest Airlines, and Trans World Airlines, Inc. It is currently owned by affiliates of
Delta Air Lines, Inc. (40%), Northwest Airlines (34%), and American Airlines, Inc. (26%). Since
its 1995 advance into the world of Internet technology for the travel industry, Worldspan has
successfully developed the strategies, solutions, and services to ensure the company’s long-term
success in the new web-based world of travel distribution. Worldspan provides worldwide
electronic distribution of travel information, Internet products and connectivity, and e-commerce
capabilities for travel agencies, travel service providers, and corporations. Worldspan currently
serves 20,021 travel agencies in nearly 90 countries and territories. Headquartered in Atlanta,
Georgia, Worldspan connects approximately 421 airlines, 210 hotel companies, 40 car rental
companies, 39 tour and vacation operators, and 44 special travel service suppliers.

To escalate the delivery of web-based technologies and services to its customers; Worldspan has
forged a number of new partnerships and equity agreements with leading travel technology
companies. Resulting technologies, joint developments, and an expanded realm of solutions and
Internet travel products are enabling the company and its customers to participate in a spectrum
of e-business opportunities. Some of the successful partnerships have been with companies such
as Datalex, a leading provider of e-business infrastructure and solutions for the global travel
industry; Digital Travel, a global online tour provider; Kinetics, Inc., developer of technology
and solutions for the airline industry; OpenTable.com, an Internet-enabled restaurant
management tools system; and Viator, a major provider of Internet-based content, technology,
and distribution services, including data management, hosting, and e-commerce. Additionally, in
2001, Orbitz LLC was launched on the Internet, using Worldspan as its Internet Booking Engine,
and in 2002, the launch of Worldspan ePricingSM made Worldspan the first GDS to introduce a
revolutionary new multi-server-based technology, offering an unprecedented selection of pricing
options to all of Worldspan’s customers.
Worldspan has a legacy of industry firsts that are not well known. The company therefore has an
opportunity to raise the industry’s awareness of its accomplishments and more importantly, its
future strategy. Worldspan continues to look at benefits of creating its own consumer brand and
has been partnering with different companies to expand the services that it can provide to its
customer base. Worldspan believes in focusing on its core competencies, and is determined to be
perceived as a distribution facilitator across all channels. It is increasingly getting a clearer sense
of its capabilities and building its appetite for technical and commercial challenges. Through the
company’s revolutionary e-world ideas, offerings, and services, along with its agility and
eagerness in meeting the needs of the travel distribution market on a global scale, Worldspan and
its customers are transforming the way travel is distributed, bought, and sold.

8.4.5GDS INNOVATIONS
GDSs are responsible for some of the most important innovations in the travel Industry:
innovations like e-ticketing; travel e-commerce; graphic seat selection; and the ability for agents
and travelers to view on one screen, public, private/negotiated, consolidator and Web fares. The
GDS companies have a proven track record of not just meeting the changing needs and demands
of travel suppliers, agents and the international traveling public; they are consistently the thought
leaders and innovators in the global travel Industry.

8.4.6 GDSs SCOPE OF SERVICES

GDS companies offer far more than just simple air travel bookings. GDS systems are capable of
booking:
• One way and return trip airline seats
• Hotel rooms
• Rental cars
• Tour packages
• Cruises
• Insurance
• Restaurant reservations
• Theatre tickets
• Itinerary changes
• Complex international routings
• Rail
• Ferry
• Limousines
GDSs also handle more complex and global transactions, provide additional services requested
by customers, provide training to travel agents and travel suppliers, offer help desk support for
customers and remit payments to travel agents.

8.5 TOPIC SUMMARY

In this topic we have looked at the various GDS, the major reservation systems are Sabre,
Amadeus, World Span and Galileo. GDSs are responsible for some of the most important
innovations in the travel industry: innovations like e-ticketing; travel e-commerce; graphic seat
selection; and the ability for agents and travelers to view on one screen, public,
private/negotiated, consolidator and Web fares. GDS companies offer far more than just simple
air travel bookings.

8.6 ASSESSMENT
Making an online booking for yourself to a destination of your own choose using a virtual travel
agency such as Expedia, Travelocity. Upon completion, send a copy of the booking to the
instructor’s email address.

IMPLEMENTATION PLAN
The topic will entail 2 hours theory and 2 hours for practice
8.7 FURTHER READING
1. Plunkett, J.W. (2008). Plunkett’s E-commerce and internet Industry Almanac (E-book)
U.S.A: Plunkett Research Ltd.
APPENDICES

EXTRA MILEAGE ALLOWANCE TABLE

Area 1 EMA
Between And Via TPM Deduction
Buenos Aires/Montevideo Canada/Mexico/USA Rio de Janeiro-Sao 510
Paulo with no
stopover at either
points
Buenos Aires/Montevideo Caracas Wholly within South 400
America

Area 2 EMA
Within Europe
Between And Via TPM Deduction
Aberdeen Stockholm Any routing 2
Amsterdam Bergen Any routing 150
Barcelona Lugano Basle (no stopover) 10
Basle Bilbao Barcelona(no stopover) 79
Basle Cork Zurich 35
Basle Santiago de Barcelona(no stopover) 2
Compostela
Bergen Barcelona Any routing 17
Bergen Basle Any routing 42
Bergen Brussels Any routing 195
Bergen Dusseldorf Any routing 96
Bergen Faro Any routing 42
Bergen Geneva Any routing 43
Bergen Lisbon Any routing 156
Bergen Lyon Any routing 56
Bergen Madrid Any routing 65
Bergen Manchester Oslo (no stopover) 83
Bergen Paris Any routing 167
Bergen Porto Any routing 76
Bergen Rotterdam Any routing 150
Bilbao Geneva Barcelona (no stopover) 102
Bilbao Milan Barcelona (no stopover) 14
Bilbao Zurich Barcelona (no stopover) 66
Bordeaux London Basle/Geneva (no stopover 317
Copenhagen Munich Basle (no stopover) 199
Copenhagen Rome Any routing 1
Cork Guernsey Any routing 115
Cork Jersey Any routing 86
Cork London Any routing 4
Faro Stavanger Any routing 64
Geneva Bordeaux Basle/Mulhouse (no stopover) 142
Geneva Marseille Basle/Mulhouse (no stopover) 193
Geneva Nice Basle/Mulhouse (no stopover) 165
Geneva St. Tropez Zurich (no stopover) 177
Geneva Toulouse Basle/Mulhouse (no stopover) 169
Inverness Billund London (no stopover) 23
London Maastricht Amsterdam 10
Oslo Reykjavik Any routing 330
Stavanger Brussels Any routing 151
Stavanger Dusseldorf Any routing 52
Stavanger Lisbon Any routing 35
Stavanger Lyon Any routing 12
Stavanger Madrid Any routing 21
Stavanger Paris Any routing 123
Zurich Nice Any routing 6

Between Europe and Middle East

Between And Via TPM Deduction
Europe Iran ( Tehran) Tehran 100
Budapest Middle East A point in Europe other than in 100
Hungary

Area 3 EMA
Between And Via TPM Deduction
Osaka/Tokyo Denpasar Bali Jakarta with no 70
stopover no
imtermediate points
between Jakarta and
Denpasar
Area 3(except when travel is A point in Area Via both Mumbai and 700
wholly within Afghanistan, 3 Delhi or via both
Bangladesh, Bhutan, Maldives, Islamabad and
Pakistan, India, Nepal and Sri Karachi
Lanka)
Area 3(except when travel is Mumbai Delhi 700
wholly within Afghanistan,
Bangladesh, Bhutan, Maldives,
Pakistan, India, Nepal and Sri
Lanka)
Area 3(except when travel is Delhi Mumbai 700
wholly within Afghanistan,
Bangladesh, Bhutan, Maldives,
Pakistan, India, Nepal and Sri
Lanka)
Area 3(except when travel is Karachi Islamabad 700
wholly within Afghanistan,
Bangladesh, Bhutan, Maldives,
Pakistan, India, Nepal and Sri
Lanka)
Area 3(except when travel is Islamabad Karachi 700
wholly within Afghanistan,
Bangladesh, Bhutan, Maldives,
Pakistan, India, Nepal and Sri
Lanka)

Area 12 via the Atlantic EMA

Between And Via TPM
Deduction
Alberta/British Europe St.Johns-Halifax- 400
Columbia/Yukon Montreal-Ottawa-Toronto
Canada/Mexico/USA South Africa Tel Aviv 660
Cancun Europe Mexico city 550
Merida Europe Mexico 150
Mid Atlantic points Fuerteventura/Gran Via Europe other 1300
except Canaria/Lanzarote/San Fuerteventura/Gran
Bahamas/Bermuda Sebastian de la Canaria/Lanzarote/San
Gomera/Santa Cruz de la Sebastian de la
Palma/Tenerife/Valverde Gomera/Santa Cruz de la
Palma/Tenerife/Valverde
New Europe Via Boston-Montreal- 1500
Brunswick/New Ottawa-Toronto
foundland/Nova
Scotia/Prince
Edward island
New Israel Via Halifax-Montreal- 500
Brunswick/New Toronto
foundland/Nova
Scotia/Prince
Edward island
Newfoundland Israel Via St.Johns-Halifax- 1600
Montreal-Toronto
Newfoundland Europe Via Halifax 700

Area 23 EMA
Between And Via TPM Deduction
Europe Australia Harare 518
Europe South Asian Subcontinent Both Mumbai and Delhi 700
Europe Mumbai Delhi 700
Europe Delhi Mumbai 700
Middle East Australia Harare-Johannesburg 588
Middle East TC3 except South west Both Mumbai and Delhi 700
Pacific or via both Islamabad
and Karachi
Middle East Mumbai Delhi 700
Middle East Delhi Mumbai 700
Middle East Karachi Islamabad 700
Middle East Islamabad Karachi 700

Area 31 via the Pacific EMA

Between And Via TPM Deduction
USA (except Hawaii/Canada) Area 3 Hawaii-for 800
North/Central pacific
fares only