In our Last post, we explained to you a few concepts of fare construction and in this post, we continue on other related topics about fare construction. HIP check is one of the most common checks used in fare construction. HIP stands for Higher Intermediate Point. Higher intermediate point is a check that has to be done for an itinerary to check if any of the fare for an itinerary from point of commencement to the destination point should be less than the actual fare and in case if any of these points have a fare which is more than the actual fare from point of origin to destination than that fare will be applied and shall be considered as actual fare for the itinerary. The point or city due to which the fare has been raised is known as a Higher Intermediate point. This concept is used in fare construction to maximize the revenue for an itinerary and this check enables the same. We understand after reading this many of you may not clearly understand the concept or logic behind the HIP rule hence below graphical explanation will make it easier to understand.
Example 1 No HIP:- Mr. Smith will be traveling to Stockholm Sweden. He will be traveling via Amsterdam and returning via Copenhagen for his return trip. He has paid GBP 2071 for his flight ticket. We will check his itinerary below to see if any HIP was applied for his travel itinerary.
If you notice above the chart on left displays fares from Aberdeen to certain cities in Europe. Chart 1.2 illustrates the cities which will be traveled for this itinerary.
Before you learn how to check for HIP it is important to read the Fare charts. So first we shall learn briefly how to read the fare chart. This is important since we have to check fares from point of origin to all other points to check HIP.
In the above Charts, the YIF is the fare Basis or fare which will be applied for the itinerary. The one which has Bold characters is the return fare and the light one is one-way fare up to this point. After Fare basis fares are displayed first in local currency in this case since the travel originates in UK the fares are quoted in GBP. Next to Local currency fare you can see NUC fares, NUC fares are used in fare construction and this are the fares that would be used for checking the HIP. Further, right next to Fares you will see Fare rules code (Z002) for the fare and finally Global indicator used between two cities and MPM between two cities. Now that you know how to read Fares from A fare chart you are ready to check for fares between pair of two cities and identify HIP for an Itinerary.
Steps to Identify HIP
- Identify the point of origin and Point of Destination.
- Mark all the cities on the itinerary.
- Note NUC level fare for Origin to Destination. In this example 3458.09 is the return NUC for Aberdeen to Stockholm.
- Make a rough chart as below and note all the NUC from point of origin to subsequent points.
| ABZ-STO | 3458.09 | |||
| Aberdeen | Amsterdam | Stockholm | Copenhagen | |
| Aberdeen | NA | 1792.53 | 3458.09 | 1211.16 |
| Amsterdam | NA | NA | 1359.61 | 1089.55 |
| Stockholm | NA | NA | NA | 590.55 |
| Copenhagen | NA | NA | NA | NA |
If you see the above chart we have compared NUC levels from Aberdeen to All subsequent cities on itinerary and from all subsequent cities to other cities is also compared to check if any of the subsequent points or any journey from point of origin has a higher fare. After comparing the above chart you will notice the highest fare for this itinerary is NUC 3458.09 which is between Aberdeen to Stockholm, the origin and destination route itself has the highest fare hence HIP is actual fare or No HIP is detected for this itinerary.
Example 2 HIP Fare Applies:- Mr. Smith decides to travel to Germany again. This time he would be visiting Berlin via Amsterdam and on his return trip, he takes a stopover in Hamburg to come back to Aberdeen. We will check his itinerary if there is a possibility of the HIP for this routing.
We follow the same steps to check for HIP as discussed for the above example. The first step is to ascertain your point of origin and destination. Then we check for NUC Fare between Point of Origin and Destination. In This case, it is 1667.23 hence it is the actual fare.
NUC between Origin and Destination – NUC 1677.23
Now we check for all the NUC fares from Subsequent points to check for a higher fare. It is advisable to make a chart as below which would make it easier to compare.
| ABZ-BER | 1667.23 | |||
| Aberdeen | Amsterdam | Berlin | Hamburg | |
| Aberdeen | NA | 1792.53 | 1667.23 | 2118.29 |
| Amsterdam | NA | NA | 669.20 | 1814.55 |
| Berlin | NA | NA | NA | 485.70 |
| Hamburg | NA | NA | NA | NA |
In this example, you will notice that multiple times there are NUC fares which are higher than the Actual fare between origin and destination. We have highlighted those higher fares above.
Fare From Aberdeen to Amsterdam is 1792.53
Fare From Aberdeen to Hamburg is 2118.29
The fare from Amsterdam to Hamburg is 1814.55
In the above itinerary since Aberdeen to Hamburg has the highest value the same is considered as HIP point and will be considered as Actual fare.
We hope the above information was useful and will help you in understanding how to ascertain HIP for a particular itinerary.
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