State Consortium Strikes Deal With Southwest Airlines - Business Travel News

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State Consortium Strikes Deal With Southwest Airlines

February 20, 2013 - 03:35 PM ET

By Holly Leber

The first airline program that leverages purchasing power from multiple state governments is set to take effect next month. The state of Oregon partnered with the Western States Contracting Alliance, the National Association of State Procurement Officials and the State Travel Manager Alliance to implement the new program, which is supported by Anchorage-based USTravel, includes an online booking component using GetThere and designates Southwest Airlines as its "official" carrier.

"Of all 50 states, only a few have a managed travel program that includes an air service piece," said Tim Hay, lead procurement analyst for the state of Oregon. "We are attempting to create a multi-state air service contract that states can utilize." The idea has been germinating for years, and Hay said it would finally come to fruition starting next month.

According to the group, "28 states representing over $250 million in potential air spend signed intents to participate prior to the release of the request for proposals. This was WSCA's largest solicitation with state participation where previous RFP experience in this type of service didn't exist." Hay added that "an air service consortium contract of this magnitude has never been achieved before."

While states that band together in NASPO have secured joint contracts in the past for other goods and services, Southwest Airlines government relations manager Jeffrey Haag agreed that this is "definitely the first for travel."

Other airlines, including Delta Air Lines and US Airways, attended an informational conference but opted not to submit proposals, according to Hay. He explained that Southwest would provide fares with percentage discounts from published pricing.

Southwest is "encouraged by the number of states that expressed interest and certainly cautiously optimistic about the revenue at play," said Haag. "We've always been under the impression that state and local government entities have significant business travel spend, so to see it represented here is certainly encouraging."

To win the business, Southwest is offering benefits "up to and including point-of-sale discounts that will be as aggressive as we need them to be," Haag said. "We would be limiting the partnership and limiting the needs of those respective government entities if we put together a cookie-cutter program."

Hay added that the program is set up at two levels: one for the states that don't have much of a managed travel program and wish to start realizing some savings from discounted airfares, and another for states that already use programs similar in concept to the U.S. General Services Administration's City Pair Program and seek additional savings.

States often "are utilizing fares they find on the Internet," Hay said.

Haag said Southwest signed a two-year "master agreement" with the state of Oregon—with opportunities to extend—providing a "framework that allows us to go in and work with these states [or such local-government entities as public universities] one on one."

Along with the airline program, the state of Oregon and WCSA are preparing the "WSCA/NASPO Travel Center." That center will provide access to travel contracts, including Southwest airfares, discounted car rental rates from Enterprise/National and Hertz and more than "11,000 hotels"—including Carlson, Best Western and Wyndham properties—"that offer at or below General Services Administration per-diem rates to state and local government employees while on official travel."

The travel center features online booking provided by USTravel via the GetThere system. It is "available to all states, cities, counties, universities and other political subdivisions that participate under their respective states cooperative purchasing programs."

Haag said Southwest will provide discounted airfares via the WSCA travel center "in the same way we do for our corporate agreements. The discounts will be filed privately through a dedicated pseudo-city or ARC code, but will be made available through public channels." In explaining that some states already are users of the Swabiz corporate booking portal, he noted that "the beauty of this agreement" is the flexibility it affords in how Southwest serves this set of customers.

NASPO in January announced that it had formed "a subsidiary entity, the WSCA/NASPO Cooperative Purchasing Organization, to manage its national cooperative purchasing program." WSCA since 1993 has served as NASPO's "primary cooperative purchasing arm, according to NASPO, which added that the new entity "represents a unified, nationally focused cooperative purchasing program that will leverage the collective expertise and experience of WSCA and NASPO, aggregate the demand of all 50 states and their political subdivisions, and help spur innovation and competition in the marketplace."

— Jay Boehmer contributed to this report. 

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