Aiming to help more state governments solicit airline city-pair fares, and encourage airlines to respond to them, a Society of Government Travel Professionals advisory board presented a new template for air contracting during SGTP's education conference earlier this month.
The template is "a starting point" for states that have no managed program, said State of Oregon procurement analyst Tim Hay. "There are maybe a half-dozen to a dozen states that have a truly managed program, and then some other states have a piece here and a piece there. A lot of them didn't know where to begin [with regard to] trying to bring more airlines into contracts. The majority has only two or three under contract--New York may be the exception--and we have heard from the airline industry that all the states were doing different things and not bidding the same way."
The RFP template offers standardized language addressing such matters as evaluation criteria and objectivity in selecting contractors, minimum purchasing volumes, pricing, penalties and restrictions, flight capacity changes and travel agency participation.
According to the document, "The 50 states have a wide variety of criteria, legal terms and other contract provisions, while their average airline budget is estimated at $1 to $5 million each."
One reason SGTP formed the advisory board, which began its work about a year ago, was that airline personnel cutbacks reduced the number of representatives available to handle custom requests. "Staffing of personnel previously involved in government contract negotiation and management has dwindled from a team to perhaps one person covering all markets globally," the board wrote. "In recent months, state and other government officials have noticed a decline in the number of airlines and the number of city-pair bids responding to state RFPs."
Also a member of the committee, United Airlines military and government sales manager Thomas Billone said the RFP effort is geared for simplification. "When [airline sales people] go to the pricing people and there are five different states with different spreadsheets and styles, they ask for one style and one sheet with the same information," he said. "So that's what we're driving to, and it makes things easier for airlines on pricing and understanding where states are coming from and how they're going to evaluate contracts. Otherwise, it's hard for carriers to figure out, when they mostly work with the federal government."
Without standardization, Billone said, complications tend to arise from such situations as travelers calling the airline reservations center directly rather than working with the authorized travel management company that is familiar with contracted rates.
The initiative evolved "into an airline tool, as well, because the airlines were just as confused about working off of different types of templates [as the states]," said Oregon's Hay. "We worked through SGTP--as a [liaison] between the states and airlines--to come up with a mutual document we could all work with."
He said the effort should help more states adopt a managed city-pair program.
Asked about the often controversial issue of who collects frequent flyer miles, Hay said state rules vary.
"Some turn a blind eye to it, while others try to track or collect them," he noted. "Oregon law says earning miles as a personal benefit is not allowed. I would have to report miles back and they would have to track that. I'm not an advocate [of it], but I don't want to go before the legislature and say I want to keep my miles."
According to Billone, airline policies vary as well, where some do not allow travelers to earn miles on state contracted fares because the rates are so low. Others, he said, see the loyalty programs as "important for building brand loyalty" and allow their collection.
Other members of the advisory board included Northwest Airlines' Denny Clifford, SGTP's Duncan Farrell, Delta Air Lines' Brian Munson and New York State's Beth Seavey.