Point of viewAI in airlines

Fare rules are the hidden tax on airline retailing. GenAI can finally read them

Every carrier writes its penalties and conditions differently. Rule-based parsers break on each new format, so agencies quote penalties wrongly and disputes follow. Large language models change the economics — if they are validated, not trusted blindly.

7 min read By · Point of view
99.8%
fare-rule accuracy with our AI engine, against an industry average of 82%1

Key takeaways

  • Fare rules sit in unstructured text across ATPCO categories such as CAT 16 (penalties), CAT 19 (child and infant discounts) and CAT 31 and 33 (voluntary changes and refunds)12.
  • Rule-based parsing needs weeks of development per airline and fails on a meaningful share of edge cases; in our delivered work, an AI fare-rule engine reached 99.8% rule accuracy against an industry average of 82%, cut penalty costs by 60% and took processing from hours to seconds1.
  • The value is not the model but the pipeline around it: parsing, extraction, cross-category validation and human review for ambiguous rules.
  • As NDC spreads, the same discipline applies to richer offers: structured, validated conditions are what let agencies sell them with confidence3.

Ask an agency what slows down selling a ticket and the answer is rarely the fare. It is the conditions attached to it: what a change costs, when a ticket becomes non-refundable, which waivers apply and how children are priced. Airlines file these rules as text, and each carrier phrases them its own way. The result is a quiet tax on every booking — penalty quotes that are wrong, customer disputes when they are, and revenue that leaks in both directions.

Why rule-based parsing hit a wall

For years the industry answered this with regular expressions and hand-written rules. They work for the formats someone has already seen. Every new airline means new development, every format change means a fix, and the long tail of unusual wording never quite goes away.

Exhibit 1

Rule-based parsing vs GenAI on fare rules

Design comparison of the two approaches from the build, not client-measured results

MeasureRule-based parsingGenAI pipeline
New airline onboarding2-4 weeks of developmentZero-shot
Edge-case failures8-15%Under 1%
Maintenance costHigh, per airlineNear zero
Format changesManual updatesAdapts automatically

Source: DaasLabs, “Transforming aviation data into actionable intelligence: travel-technology case study” (2026)

What a production pipeline looks like

A language model on its own is not the answer; an unvalidated model simply moves the errors somewhere harder to see. The pipeline that worked in our delivered work has five steps: parse the raw rule text, run LLM inference, extract entities into a fixed schema, validate across categories, and only then output API-ready JSON. Categories are processed in parallel, airline-specific logic covers the carriers that need it, and anything the validator cannot reconcile goes to a person.

  • Parse. Read the ATPCO rule text and its category.
  • Infer. Use the LLM to interpret conditions, windows and amounts.
  • Extract. Map the result to a structured penalty or discount schema.
  • Validate. Check consistency across categories and against known rules.
  • Review. Send ambiguous cases to a human before they reach a quote.

NDC raises the stakes

IATA's New Distribution Capability lets airlines distribute richer offers — bundles, ancillaries and branded fares — through direct APIs as well as GDS channels3. That makes content more valuable and harder to compare. Agencies now reconcile offers that look different on every channel. Structured, validated conditions are the common language that lets them sell those offers without guessing.

The model reads the rule. The pipeline decides whether the answer is safe to quote. (DaasLabs view)
For executives

What this means for your bank

  1. Measure penalty-quote accuracy per carrier and category, not model accuracy in isolation.
  2. Put cross-category validation and human review in the pipeline before any quote reaches a customer.
  3. Start with the carriers and categories that drive the most disputes, then extend zero-shot.
  4. Use one normalised schema for GDS, NDC and direct content so conditions can be compared.
Put it to work

How DaasLabs can help

See the delivered fare-rules work, with before-and-after examples and accuracy by carrier.

Learn more

Design and run fare-rule extraction as part of our Commercial, Distribution & Revenue service.

Learn more

Meet the distribution agent squad, including the Fare Rule Extractor.

Learn more

Sources

  1. 1
  2. 2
  3. 3

Figures are drawn from the cited public sources. Opinions labelled “DaasLabs point of view” are our own.

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