Piloting a new air travel policy that allows travelers to select either a refundable, contracted fare or a publicly available, nonrefundable one, the U.S. federal government's National Science Foundation discovered a savings opportunity of $2.7 million.
NSF currently has a travel policy that encourages travelers to "use contract citypair fares with the appropriate exceptions," according to NSF travel advisor Hilary Haight, speaking here last month during a Society of Government Travel Professionals conference. However, due to budget constraints and increased scrutiny on travel spending, the agency sought to alter the travel policy to allow greater use of more competitive airfares. Booking contracted fares covered by the General Services Administration's City Pair Program, NSF determined, should be promoted as optional.
"As we were considering how to change the travel policy and what parameters we wanted to put in place, we allowed our [travelers] to participate on an optional basis in the nonrefundable pilot," said Haight. "It was a year long and it gave the individual traveler the option as to whether they wanted to use the nonrefundable fares [or] the government fare." Haight later told Management.travelthat those opting to book nonrefundable, non-contract fares could do so "on their own, outside of our travel agent."
Of 911 NSF air tickets purchased during the pilot, 238 were nonrefundable fares, according to Haight. "Had we paid what they were priced [as part of the City Pair Program], we would have paid a little over $541,000 for those tickets." Instead, NSF paid roughly $425,000, "representing a gross savings of about $116,000."
Haight discovered that travelers booked outside the contracted program "when the City Pair Program [fare] was relatively high" or "in a more remote market or in a market where one carrier dominates," as opposed to competitive markets where multiple CPP carriers offer low fares.
Haight estimated that "if we link those numbers across NSF, we have an opportunity savings of $2.7 million yearly." NSF books about 23,000 tickets and spends $16 million annually on air travel.
By allowing travelers to book outside the City Pair Program, NSF exposes itself to greater risk---namely losing money from unused tickets--Haight acknowledged. "We had 11 cancellations through this pilot, representing just about $6,000," she said. "We were not able to recoup the funds, however, it was more than offset by our substantial savings."
"In our case, we have a lot of folks that are trying to manage grants. They are trying to achieve cost savings," Haight explained. "My folks say, 'My trips change all the time, it's up to you, you don't need to book that.' But we have other people that say, 'I don't want to spend $1,600 on airfare when I can spend $500 and save the money for some of the things that my department needs.' We have people who say they would rather travel more and put the money into the grant process. We are all about funding research--that is our core mission."
Although NSF has not yet changed its travel policy, Haight said she expects that to happen soon. Within the new policy, NSF will not mandate use of nonrefundable fares in more competitive markets, she said. "We don't mandate. We follow the rules, but we do not mandate. This is completely optional."
When asked about tracking and reporting tickets booked outside of the City Pair Program, Haight said, "I don't anticipate a huge problem with the reconciliation, but we are going to have to work through that when it comes."
NSF designated an employee in each division to be "an expert on travel and an expert on our problems, so they can be a go-to person in their office," Haight said. "Most of our people are PhDs; they are experts in their fields of research but maybe not so expert on more mundane matters like travel. Associates are focused on their cost and see travel as an ancillary support function that someone needs to deliver to them, but don't necessarily prioritize their time to understand not only the rules but the tools that we have for that."
The Office of Management and Budget recently requested that NSF reduce its overall travel budget by $3 million, which Haight now sees as achievable. "We are negotiating on that number, but we are going to try to deliver," she said. "I have done about 30 briefings in the last 30 days with our various customer groups in terms of education and getting the word out" about the new travel policy.