The nation's largest airline, Southwest Airlines, is once again a formal participant in the world's largest managed air travel program. Along with Continental and Hawaiian airlines, Southwest on Oct. 1, will be added to the U.S. General Services Administration's City Pair Program, which leverages the federal government's purchasing power to secure heavily discounted airfares for its employees and military personnel.
Southwest last submitted formal bids for GSA's citypair contracts in 2007, but has continued to offer discounted government fares to federal employees as a noncontract carrier "in every market that Southwest Airlines serves," said Southwest national corporate relations manager Scott Anderson, who also oversees the carrier's government relationships. Noting Southwest's ongoing relationship with GSA "decision makers," Anderson added that "it had been mentioned on occasion that the program would be strengthened by utilizing the contract carriers more."
GSA describes the City Pair Program as "the largest managed airline program in the world." With very few exceptions (including when a noncontract carrier publicly offers fares lower than those GSA has negotiated), GSA requires federal government travelers to use the CPP's fixed airfares and contract carriers. The program started in 1980 with 11 markets and about $1.3 million in awarded business. For fiscal-year 2011 (starting in October), the program will encompass more than 5,700 domestic and international city pairs offered by 13 airlines, with average rates "68 percent below full commercial airfares" and total estimated value of about $2.9 billion, according to GSA.
GSA awards citypair contracts based on "availability of nonstop service, total number of flights, flight availability throughout the day, average elapsed flight time, availability of jet service and price of service." Also, GSA bases contracts on "both quality of service and price. This allows an award to be made to a higher-priced carrier if that carrier has superior service."
Southwest won contracts for 305 domestic city pairs worth an estimated $120 million. "That still isn't enough in our book," quipped director of corporate sales and distribution marketing Rob Brown. "But we understand that there is a process, and we'll win some markets but not others. On the surface, we are pleased with the markets we were awarded."
Continental, which had not submitted a bid since 2005, won contracts for 46 city pairs, all international services. "We opted not to do it for a few years, but now the timing was right" to rejoin the program, according to a spokeswoman.
Delta Air Lines won contracts for FY2011 estimated to be worth the most--$830 million spread across 1,156 domestic and 400 international city pairs. Other leading participants include American Airlines (1,622 total awards worth an estimated $725 million), United Airlines (1,033 total awards worth an estimated $589 million) and US Airways (748 total awards for an estimated $397 million).
According to GSA, requiring federal employees and members of the military to use contracted fares when available "is the incentive necessary to obtain airline participation and allows the airlines the business volume necessary to offer discounted rates." Meanwhile, "because the fares are so attractive," according to GSA's Web site, "the airlines insist that only federal employees traveling on official business be allowed to use them." Federal contractors, for example, cannot make use of CPP fares.
In addition to lower-than-published fixed fares based on one-way routes, CPP benefits include last-seat availability and fully refundable tickets. Contract fares have no blackout dates, no advance purchase or minimum-stay requirements and no cancellation or change fees, according to GSA.
In many city pairs, GSA secures two fare types: a guaranteed fare and "a capacity-controlled fare with an even deeper discount." GSA encourages federal travelers to make reservations as soon as plans are firm in order to take advantage of the latter fare type.
Though economy-class contract fares generally are "mandatory," according to GSA, CPP also includes some business-class fares for longer international flights.