Travel Technology for Dummies: The Difference Btw. Fares, Rates & Tariffs?

Travel topics explained in a simple way: Today let us understand the difference between fares, rates and tariffs.

As a definition, a fare is usually referenced to in air travel while rates are used with hotels. According to ATPCO (Airline Tariff Publishing Company), a fare is not only the amount a passenger pays, it also contains the conditions for travel at this amount – that are the rules and/or restrictions that must be satisfied in order to qualify for a specific fare.

Together, fares and rules form an infrastructure used for autopricing (identifying a fare electronically). A fare has 13 components, including tariff, carrier, rule, market and amount.

Fare class

Also called fare basis, it contains three parts: fare class code, explanation text and booking code. Based on industry standards, the fare class code is an 8-character code that signals fare parameters in an abbreviated form. The fare class also serves as a bridge between the fare and the rule provisions, thus enabling a fare to price automatically. It is usually assigned by the carrier. It usually indicates class of service and may also indicate basic ticketing requirements a passenger must meet to qualify for a given fare, such as day, season, reservation/payment requirements and fare type.

Fare family

A method of identifying multiple fare classes within a single entry. Lately used to sell bundles of several ancillary services, generic services, fare conditions and booking class (which usually trigger mileage accrual).

A fare family is a group of fares that airlines use to market different travel options associated with an airfare – here at the example of Lufthansa (Source: PASS).
Selected fares on the shopping card (Source: PASS).

Fare rule

A rule that states the conditions of travel for specific fare classes. As used in this document, the term can refer to rules governing published fares (grouped by categories) or to fares that are contained in the text of a rule (fare-by-rule). The term is used to differentiate between this type of rule and a governing rule. A rule has three components: fare class code, booking code and category restrictions.

Tariff at ATPCO refers to a database that contains data defined by system, geographic scope and distribution process. Also, tariff is the term used for information filed with governments when a legal filing is required. It may also refer to written fare and rule information including the following: Published (public) tariff, which contains fare and rule data that is available for public inquiry, whereas a private tariff contains fare and rule data that is not (private tariffs have a limited distribution). Paper tariffs are officially filed on paper with a government.

Traditional Flight Distribution

If the traveler doesn’t use the website of the airline (and hence use the e-commerce engine of the airline) but consults a travel agent who uses a GDS, then the GDS consults a 3rd party data base for schedules of flights (e.g. OAG) and another 3rd party data base for the fares for such schedules (e.g. ATPCO) and combines such data to provide an offer, subject to availability which the GDSs become from the airline.

Source: IATA

Airline Retailing in an NDC World

In an NCD world, the idea is slightly different: the offer/order is now created by the airline which combines prices, products and availability. In IATA’s view, the GDSs become content aggregators or the agencies aggregate content themselves. Challenges with such new way of thinking, I listed in my NDC blog.

Source: IATA


Picture source: Bambuh / shutterstock

This Post Has 11 Comments

  1. Avatar
    David

    Dear Michael
    Thank you for keeping up this great blog. There are so many insights which are hard to find elsewhere.
    I was wondering though: Why does the GDS only contain availability and a separate schedule/fare publisher is required if both information comes from the airline anyway? Couldn’t both be published in the GDS?

  2. Avatar
    Melbourne Taxi

    hey There Thanks for sharing this great blog!

  3. Avatar
    Maharaja Train

    Wow, beautiful blog. Thanks for sharing, have a good day.

  4. Avatar
    Gaurav Agarwal

    Hello,
    If the distribution of fares is controlled by Cat 15, Cat 25 and Cat 35, then why do we have private tariffs? And how do private tariffs limit the security?

  5. Avatar
    Cedar

    One way to find deals is to consider traveling when demand is relatively light. Often, you can get a deal on flights leaving on a Tuesday or a Wednesday, when fewer people are leaving on vacations or traveling on business.

  6. Avatar
    Abhinav Bhatia

    How does NDC way of distribution differs from the Ecommerce engine shown in the traditional diagram. What technology does Ecommerce uses to connect to PSS ? Does Ecommerce Engine also uses NDC in the background or is it just a UI connecting to PSS directly ?

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