They try to use the first three letters first, and that works for the majority of codes, but sometimes they’re already in use.
So the second option is just some unique combo of letters in the city’s name, like EWR for Newark.
If not that, they might take initials of a metro area (DFW for Dallas/Fort Worth) or an honorary name of an airport (JFK).
Canada’s codes are some of the weirdest because they reused old weather station identifiers for the newly built airports.
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