Canada Signs Rider For Agency, Amex For Card

<B> Canada Signs Rider For Agency, Amex For Card</B>

By Carolyn Green

<I>Ottawa</I> - Two mammoth new contracts for its travel management and corporate card accounts show that the Canadian government intends to use technology to zero in on the bottom line.

Among the details of the contracts, valued together at almost $2 billion over the next five years, are concepts new to the Crown including transaction fees, online bookings, centralized call centers and online travel management reports.

Both contracts--with Rider Travel Group Inc. for travel management services and with American Express for corporate card--are for three-year terms, with two one-year extensions possible. And in both, insiders said, the focus was squarely on the most cost-effective bidder.

Incumbent Rider Travel of Toronto edged out Amex Bank of Canada, the Canadian arm of U.S.-based American Express, for the travel management contract, which covers 75 federal government departments and agencies.

Unlike the previous revenue-sharing contract, the new agreement is based on a fee for service. Transaction fees will be paid for air and rail travel, with the amount changing each year. The fee structure provides a range of charges, depending on such variables as whether tickets are domestic or international, electronic or paper, online or by phone. Over the three years, the average fee per transaction is expected to be in the range of C$30-C$35 (US$21-US$24.50).

"The cost will depend on the mix of transactions. The greater the number of automatic and electronic bookings, the lower the cost," said Diana Dowthwaite, a spokesperson for Public Works Government Services Canada, the government department that administers the travel services contract.

To complement the fees, the government is negotiating with major Canadian carriers for net fare arrangements, Dowthwaite said. Any commission paid outside the net fare agreements will flow to the government.

While the new transaction fee arrangement is expected to be more advantageous than a rebate, "The extent of the saving will not be known until we conclude our agreements with the airlines," she said. In the last fiscal year--April 1996 to March 1997--the Canadian government spent C$177.9 million (U.S. $124.5 million) on air alone.

Meanwhile, Amex Bank of Canada was named the government's sole supplier of corporate card and travelers check services.

Canadian government employees charge about US$231 million worth of airline, hotel, car rental and meal expenses annually, and buy an additional US$42 million worth of travelers checks, so the contract could bring American Express $1 billion in charges over the five-year period. Although Amex has supplied these employees with travelers checks for nine years, the new contract marks the first time it will offer charge card services.

Dowthwaite, noting that the charge card contract is administered not by her department but by the Treasury Board, said Amex won the bid by offering "the best value, considering technical merit and financial considerations such as rebates to the Crown." She declined to disclose how large the rebates are, though she acknowledged that Amex's offer was higher than those of the other five bidders, including Diners Club/enRoute, the incumbent for the past six years.

While both Rider and Amex will provide travel management reports, Dow-thwaite said Rider, as the travel service contractor, will be the principle source of travel information, which it will provide to government users through a PC-based reporting system. Reports from Amex also will go to Public Works, and be compared with Rider data and analyzed for trends.

Like the travel agency contract, the card program, which includes services such as central billing and ATM access, also is designed to maximize expense control and reduce administrative costs, said Pam Arway, Amex Canada's senior vice-president and general manager of the Travel Services Group. Arway said Amex's management information will help the government gain enhanced tracking capabilities that will allow it to negotiate better rates from suppliers. In addition, Amex will provide in-depth expense management consulting to each government department to provide better budget management.

On the agency side, too, Dowthwaite said Rider--the only bidder other than Amex--won the contract by offering the most cost-effective bid.

Indeed, said J. Robert Mondoux, Rider's vice-president of client services and national coordinator for government travel services, "They were looking for three things: quality service, the best possible price and a system that is as easy as possible for them to administer." Neither Rider's track record nor its all-Canadian ownership had anything to do with the choice, Mondoux asserted, since the contract was subject to government procurement provisions that ban special treatment for locally owned companies.

Dowthwaite said a key element in the government's wish list was the ability to "take into account rapid changes in travel technology, and propose ways of streamlining the provision of reservation services that will improve the efficiency and responsiveness of the travel service and reduce overall travel costs."

Among the technology tools Rider will introduce are: automatic direct booking, e-mail requests, electronic ticketing, the creation of five networked call centers with automatic call distribution and computer telephony integration for traveler profiles.

To that end, the agency will upgrade and reconfigure its telecommunications system and implement a desktop point-of-sale system. Rider also will consolidate from the 26 offices that handled the government account in the past to call centers situated in Halifax, Montreal, Ottawa, Vancouver and Winnipeg.

Rider also is rolling out Sabre's BTS automated booking system, with which Rider announced a distribution contract.