City Pair Fares Are They Still Cost Efficient?

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» Posted by on Jan 19, 2015 in Airlines, Industry Postings, White Papers | 0 comments

In November 2011, Executive Order 13589 “Promoting Efficient Spending” was signed in to order. In that Executive Order, each agency was directed to reduce its combined costs in a variety of administrative categories by not less than 20 percent in Fiscal Year (FY) 2013. A follow-up memorandum issued in May 2012 noted (I’m paraphrasing here) that while travel is often necessary for federal employees to discharge their duties, we are also required to be good stewards of federal funds and agencies must do all they can to manage their travel budgets efficiently. The memo went on to state that each agency shall spend at least 30 percent less on certain travel expenses than they did in FY2010 and to maintain the reduced rate through FY2016.

This reduction in travel budgets raised the age old question:  “Why are we required to use City Pair Fares when there are penalty fares available at a much lower rate?” We’ve spent a lot of time in the last few months reviewing with our travelers the reasons we prefer that they book a City Pair Fare and not a penalty fare.

In 1980, the General Services Administration (GSA) developed the City Pair Program (CPP) to provide discounted air passenger transportation services to Federal Government travelers. Many of our travelers have noted that while the City Pair Fares are lower than the standard coach fare, penalty fares are even cheaper.

The average savings is 63%-77% below commercial full fares. A critical aspect of travel planning is flexibility and the CPP has many features that allow government travelers all the flexibility possible. We spend a lot of time pointing out that these flexibility features are what makes the City Pair Fare a better option over a penalty fare.

Features of the program include:

  • Non-stop service was awarded on 95% of the markets where non-stop service was offered. This feature saves the government traveler time which means more time spent in the office and not sitting in an airport waiting for the connecting flight.
  • Fares are priced on one-way routes, permitting agency travelers to plan multiple destinations. Our travelers can combine multiple trips into one and again spend less time on the road and more time in the office.
  • Fares are unrestricted, meaning:
  • No advance purchase required
  • Tickets are fully refundable
  • No charge for cancellations or changes
  • Last seat availability
  • No blackout periods
  • No minimum or maximum length of stay required

The last feature is one of the most beneficial and cost efficient for our travelers. No advance purchase and fully refundable means that government travelers can cancel a trip at any time and receive a full refund. Trips can also be changed to accommodate changes in operational business needs and changing the reservation will not incur any additional fees or charges.

The Federal Travel Regulations (FTR) requires nearly all Federal Government travelers to use the CPP which is part of the reason GSA is able to obtain such phenomenal pricing. There are a few exceptions for not using the CPP; however, travelers that use these exceptions would have to consider the additional cost that typically goes along with standard commercial fares. With exchange fees ranging from $100 – $150 each time, a penalty fare could go from being cost efficient to very expensive in no time. In addition to the exchange fees, trips that are cancelled could mean lost funding for the agency. Penalty fares are usually non-refundable and those that do provide a refund only offer a portion of the original fare and they’re non-transferable which means that they can only be used by that same traveler. Some may come with additional restrictions and black-out periods that restrict when the ticket can be used.  Those who travel frequently for their agency may be able to use that partial refund but for the infrequent traveler, it will most likely result in lost funds for the agency.

Some airlines that do not win the contract offer federal travelers a government fare—sometimes referred to as a “me too” or discounted government (DG) fares. These fares are usually comparable to the GSA City Pair fare in price; however, they may or may not be fully refundable and may come with ticketing restrictions. Again, those restrictions need to be fully researched and taken into consideration when booking a DG fare.

Our EGov Travel System has the mandatory use of the CPP built in so that travelers can easily identify which fares are contract carriers and which ones are not. Built in system audits force travelers who did not choose the contract carrier to provide FTR justifications before completing their travel authorization. These built in controls encourage the use of the CPP and keep our travelers in compliance with federal travel regulations as well as help our customers maintain better control of their travel budgets.

Agencies should take into consideration the nature of a trip and the probability of a reservation change or cancellation before allowing travelers to use a penalty fare over the GSA City Pair Fare. Something as simple as a weather delay or cancellation could end up costing an agency much more than what they would have paid for a City Pair Fare. The bottom line is:  Yes, the City Pair Fares are still the most cost efficient choice for helping to reduce travel funding and saving the agency’s travel budget.

By Carole Byrd

Disclaimer: The contents of this message are mine personally and do not reflect any position of the Government or my agency.  Use of this equipment is consistent with the agency’s policy governing limited personal use.

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