ACTE Forum Hears World Bank Story, CTD Insight

<B>ACTE Forum Hears World Bank Story, CTD Insight</B>

By Barbara Cook

<I>Washington - </I>The World Bank's Angie Attena presented the story of the development of the bank's airline program and an industry panel discussed the potential for CTDs as part of the July 11 ACTE "Innovations" forum here.

Attena, section chief for travel at the Washington, D.C.-based World Bank, presented a case study of the airline program that she implemented in April of this year. Because the bank's travelers use international flights 95 percent of the time, Attena issued an RFP for international travel only, leaving bank employees free to select their own carrier for domestic travel. The World Bank spends $100 million annually in air travel, largely through complicated international itineraries to 181 different countries with tickets that often have 10 flight segments each.

When the bank issued an RFP for its airline program in October 1999, officials recognized that the biggest obstacle that had to be overcome was the bank's own history of allowing its travelers flexibility to select their own carriers. "Our culture was 'we don't impose,' " Attena explained. "We had rules, but we had a culture in which exceptions became the rule."

The international commission cap changed all that by slicing into the revenue share arrangement the bank had with its travel provider. For a number of reasons, largely related to the complicated travel arrangments required by bank travelers, the best option to enhance revenue to cover the cost of travel services was to go through a formal procurement process for airline services, Attena said. Bank officials issued three separate RFPs because the regional needs of their offices differed. Four airlines ultimately were selected for Atlantic routes; two airlines were named for Pacific itineraries, and two airlines were named for Latin America. Attena said the contracts are limited to one year "because the industry is changing and we were unsure of the results." A bank-wide user group was formed to elicit traveler support for the goals of the program and the airline awards were based on benefits to travelers in addition to financial return to the bank, she said.

The program is structured to require bank travelers to take the contract airlines on the international portion of their trips. Travelers retain freedom of choice beyond the gateway cities.

While exceptions to the use of mandated carriers are allowed for special traveler circumstances, they must be "clearly defined and consistently applied," Attena said. Exception requests were high during the first week that the mandatory travel policy was in effect, she said, adding, "We stuck to a tough policy and they pretty much went away."

Attena listed four factors that she said are essential to success in implementing an airline program. Most important is senior management support, followed by a policy of centrally controlling policy exceptions. The RFP approach is a beneficial aspect of a program, she said, because this makes market share a contractual obligation and helps to keep down the number of exceptions. Finally, Attena said communication with travelers on all aspects of the program is critical. While the bank was concluding its airline RFP, officials also renegotiated the agency agreement with American Express, so that it now pays Amex a management fee with the bank receiving all commissions.

In the session on the Airlines Reporting Corp.'s Corporate Travel Department, Tom Wilkinson, the industry consultant turned GetThere.com senior director of business travel solutions, said the designation isn't a perfect fit for every company, but it can provide tangible results for businesses positioned to take full advantage of it. He listed the benefits of being a CTD as cost savings through eliminating an agency management fee, among other savings; tighter control over the process of purchasing business travel, and ownership of the PNR data. The ideal CTD candidate, Wilkinson said, has a single location onsite, understands the economics of the CTD arrangement, is involved in oversight, negotiations and communication, and has senior management support that includes recognition for the new role/responsibilities and value added by travel management.

Panel member Char Dewalt, travel manager for the Navy Federal Credit Union, said her firm became a CTD in January of this year because the ability to take full control of the travel operation "made us want to go in-house," Dewalt explained. Further, she said, the credit union's board of directors wanted to bring travel in-house and was willing to consider it a cost of doing business.

Dewalt was given a budget of $75,000 to help launch the CTD. The Navy credit union has 200 travelers and an air travel budget of less than $1 million, Dewalt said. "The real positive side to the CTD designation is the service to travelers," she explained. Among these services, employees are able to make appointments to discuss their travel requirements and the credit union has added a car shuttle to nearby Baltimore-Washington International Airport.

Jeannine Rehel, ARC's manager of CTD and electronic commerce, said that 50 CTDs have been approved as of July 7 and another 54 have initiated the application process. She stressed that the CTD selection is not "an all or nothing strategy." Becoming a CTD does not mean a company will no longer be able to work with a travel agency, Rehel said, pointing out that the CTD can insource or outsource almost all functions. Legal and fiduciary responsibility may not be outsourced, however.