The Department of Defense is allowing travel management suppliers to levy a roughly $2 per-ticket fee increase covering the Sept. 1 rise in the cost of global distribution system services, pending discussions by Nov. 1 on a permanent solution. The General Services Administration, however, is requiring discussions before the implementation of any added charges, frustrating some travel management providers who face uncertainty over whether they would be reimbursed for the added costs.
DOD and GSA represent the two largest chunks of the estimated $20 billion annual U.S. federal travel spending and use a mix of vendors led by Carlson Wagonlit Travel and the Sabre Travel Network GDS. CWT has announced a $2 per-ticket feefor most clients to offset the cost of "optional, full content" access to certain airlines through systems like Sabre's. With exceptions, the travel management industry is adopting the roughly $2 per-ticket charge in order to avoid airline-imposed fees that would average $8.75 per ticket.
"We have worked with both DOD and GSA to educate them on the issue and seek relief from these new fees," said Society of Government Travel Professionals president Marc Stec ( see 5Q) during the group's education conference here last Thursday. "This is also happening in the commercial marketplace, where most of the travel management companies are asking corporate clients for increased fees. [In government], there has been a different approach. DOD has recognized they do want full content and are modifying their agreements to require travel management companies to provide full content and full availability of fares. DOD has recommended to its entities not serviced by contracts under the Defense Travel Management Office that they implement an across-the-board a $2 fee increase subject to each contractor demonstrating the validity of those charges within the next three weeks."
He expressed optimism that agreements would be reached by Nov. 1 on whether there is a $2 fee--more or less--that would apply to all DOD entities and "provide the TMCs with immediate relief."
"GSA has taken the approach that they are mindful of those issues, but they want us to demonstrate the need prior to implementing any relief," continued Stec, who also serves as vice president for contracts and proposals at CWT's government and military travel solutions unit, SatoTravel. "Right now, we're in a situation where we're bearing those costs."
Speaking on a stage to which GDS company officials and one airline manager were invited but "respectfully declined," based on advice from legal counsel, GSA eGov Travel Program Office manager Tim Burke and the chief of the DOD Defense Travel Management Office's commercial travel division, Paul Joyce, addressed the topic.
"I'm not going to say [DOD's approach] solves all the issues, but we will share all the experiences we can on the federal side," said Joyce.
According to Burke, "The real issue was what can we do contractually, legally, ethically? I promise we will expedite where we can. GSA has the resources lined up and the [federal agency] customers are aware that we can help them make those adjustments in the event that there is an impact."
Asked why GSA appears to be less responsive than DOD, Burke explained that the two organizations have different sets of contracts, "so it's hard to homogenize it quickly and still remain competitive until we get the data in front of us and see what we're dealing with. Most folks on the TMC side like this competitive environment where they work closely with their customer agency. Federal agencies don't necessarily want to homogenize at GSA quite yet, so therein lies our challenge. How do we homogenize the things that should be, and allow differentiation when it should be differentiated? It's important to emphasize that contracting with many different contracting vehicles is not as simple as just moving from first base to second. Our contracts are set up differently and we have a two-step process to go through. There are also certain laws that have to be implemented a certain way.
"It's not a question of opinion," Burke continued. "I think the TMC services we get in the federal government are terrific. It's high value. That's not the concern."
Nevertheless, TMC officials showed their own concern. "It seems like we're the bottom chicken in the chicken coop here," said one. "We see a failure of recognition that we are having money taken out of our pockets." According to CI Travel president and COO Kevin McElroy, "The GDS changes have had a significant impact."
On behalf of TMC members, SGTP's Stec in late July had written DOD and GSA to both inform them of the GDS changes and recommended that "the government acknowledge the 'opt in' method to reduce the impact of the new fees and guarantee access to all available airfares. This new GDS fee would be considered a pass through by the travel agency or other provider." Referring to "much uncertainty on the part of travel agencies," Stec sought "GSA's and DOD's immediate attention and resolution of the issue, without the need for prolonged negotiations on each contract."
GSA's Burke and DOD's Joyce both commented on the continued viability of GDSs. "We looked at technology out there, some of the software that translates or gets data from sources that are not in the GDS and puts them in the GDS," said Joyce. "Are they mature enough yet to evolve to only those sources? Absolutely not. GDSs, to my knowledge, [are the] only [source of] 'full content' with all the information. I'm not speaking for the future, but today."