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Life Cycle of the Fare

What is a Fare?

At the most basic level, a fare is a price for an airline ticket between two locations. The more than 100 million fares that exist today are the primary source of revenue for commercial airlines. Distributing these fares quickly and accurately is critical to the business of providing air transportation.

But that’s not the whole story. Each fare also contains a large amount of associated information, including the rules and restrictions governing its use. These rules may include information such as the time of day when a traveler can use the fare, the particular routing on which the passenger must fly, and even which type of passengers may use the ticket (such as children or veterans). Airlines, travel agencies, and online travel companies also need an automated system that can package fares with the correct supporting information. ATPCO built and continues to operate the automated system that attaches these rules to a particular fare, making it possible for airlines to dynamically alter prices as market conditions change.

ATPCO’s complete set of sophisticated data management tools support this intricate fare information though its journey from inception to analysis, which we call the Life Cycle of the Fare.

The Life Cycle of a Fare

The business of air travel in the 21st century demands the ability to implement pricing decisions and receive feedback on how those decisions affect revenue, thereby informing future decisions. We call this cyclical process the Life Cycle of the Fare. ATPCO’s systems and products automate the mechanics of this process for air carriers, making complex pricing solutions and strategies a reality for the global travel industry.

The life cycle begins when an airline makes a pricing decision and sends fare and rule data to ATPCO, which can also input this data on their behalf. We call this part of the life cycle Data Collection. ATPCO collects fare data from 460 airlines worldwide, representing 97 percent of commercial air travel. Our Web-based platform and system tools allow airlines to package fares with their associated rules, which includes providing information on rules, routings, and optional services such as in-flight entertainment and lounge access.

Data Distribution forms the second part of the life cycle. ATPCO sends all fare data to all of the major pricing systems, online travel agents, and other vendors that sell tickets to travelers. We also send this information to governments if fares require regulatory approval. Fare distribution occurs as often as once an hour, allowing airlines to respond to market conditions as they change. As a single-source distributor, ATPCO makes the distribution process more efficient and less expensive than when each airline distributed data to each ticketing agent. After distribution, tickets are sold and travelers fly to and from their destinations.

The revenue from these tickets presents a special challenge to airlines, who must process, audit, and collect information from thousands of tickets that include flights on multiple airlines. The processing of this information, known as Revenue Accounting, constitutes the third part of the Life Cycle of the Fare. ATPCO has created tools, most notably in cooperation with industry partners such as IATA and ARC, that process sales data without error, ensuring airlines receive the revenue they earn.

Fare information in ATPCO systems and data from our revenue accounting processes offer a wealth of market information. The process of using this data to inform future pricing decisions, called Fare Management, constitutes the fourth and final part of the life cycle. Sales data and competitors’ fare levels are merged on ATPCO’s systems into a format that analysts can use to inform the creation of new fares. ATPCO’s comprehensive database of over 100 million fares provides the most complete body of information available, aiding in confident decision-making. Once a decision has been made, fares can be added, changed, or canceled, and the Life Cycle of the Fare begins again.