The state of Alaska's procurement department in 2004 sought contracted rates from the state's largest air carrier only to be rejected on the basis of a poorly managed travel program. During the subsequent six years, the state implemented a fully end-to-end program for its $60 million annual travel spend, secured a contract with Alaska Airlines and saved a total of $11.6 million.
Accommodating travelers from 15 cabinet-level departments, including the executive branch, presented unique challenges for the state of Alaska's travel department, as did the state's distinct, rugged geography, which requires almost complete reliance on air travel. Alaska director of finance Kim Garnero not only negotiated 15 contracts with regional carriers, but also incorporated corporate travel policies on the permissible use of a traveler's own private aircraft and snowmobile, and established new risk management rules for travel to remote locations.
During the initial attempt to contract with Alaska Airlines, the state was unable to demonstrate how much it spent with the carrier. Though Garnero informed the airline that the state was its top client, proving it became impossible. "We didn't have a handle on our data," she said, adding that the airline "couldn't tell a state ticket from a non-state ticket."
Alaska Airlines is "obviously our primary carrier and monopoly carrier in many of the markets, including our most frequented markets," said Garnero. "They would not deal with us as a single customer because we were individual people buying tickets" on various personal credit cards.
Garnero acknowledged that the travel booking process at that time for state government travelers was a "free for all." Heeding Alaska Airlines' advice, the state in 2004 distributed corporate credit cards issued by U.S. Bank. In fiscal year 2010, almost 75 percent of card transactions were related to travel.
Alaska in 2004 also went out to bid for a travel management company, discussing its needs with both small and large TMCs. The state chose Anchorage-based USTravel, now an affiliate of BCD Travel, for a five-year contract including a $14 base transaction fee and $5 initial recovery fee.
Moving To An Online Environment
Though the contract with USTravel provided access to the TRX ResX online booking tool since 2004, Alaska only recently moved travel bookings to an online environment.
"Our biggest criterion in the second contract that wasn't a part of our first contract was an online booking tool," said state travel manager Kathy Adair. After the initial contract expired in 2009, USTravel won a new contract after a bidding process and equipped the state with a customized version of ResX, which incurs a booking fee of $6.50. Agent-assisted bookings generate a $15.50 base fee and a $2.48 recovery fee. Though the agent-assisted fee increased from the original contract, the state on the whole now pays less in booking fees as almost 80 percent are completed online without agent assistance. "Only about 5 percent of transactions that start in the tool actually end up with agent assistance," Adair added.
For hotels, USTravel negotiates with properties on behalf of the state. To be listed as "preferred" for Alaska's government travelers, properties must accept the state's ghost cards and must not charge tax. Within the booking tool, hotels are sorted by price, starting with the lowest. Travelers are encouraged to select the lowest rate within the tool, whether or not the property is preferred.
Complaints Down, Approval Ratings Up
"A lot of state travelers want to be able to do it yourself, and that was one of the biggest problems that we had before with the booking request form--it was so labor-intensive," said Adair. Now, the self-service afforded by the system "is the key factor in customer satisfaction."
The program did not immediately take off. "When we went to the state travel office, the push back was pretty substantial," said systems administration supervisor Cheryl Shakespeare.
To address complaints, the team coordinated with each state department to designate one person as a liaison between travelers and travel planners. The travel department communicated with the liaison about any compliance issues with specific travelers.
The travel department "responded to over 100 complaints about the travel office" during former Governor Sarah Palin's administration, Adair said. "We had some folders that might have been an inch or two thick of complaints and now we are down to one or two complaints a month."
Meanwhile, "approval ratings are way up," Garnero added. "They were horrible for a long time, and now the quarterly surveys include some really nice compliments."
Traveling In The Bush
Alaska's policy allows travelers to use their own aircraft for business as long at it is registered with the state risk management office and is issued a certificate of insurance. The state reimburses travelers commuting by snow machine or boat at the rate for motorcycles set by the U.S. General Services Administration.
The travel department also is responsible for $27.4 million annually in travel related to the state's Medicaid program, which includes transportation for beneficiaries in remote locations to obtain medical assistance.
Previously, beneficiaries chose their own air carriers, Garnero explained. Now, such travel is arranged by the travel department and must be on air carriers that participate in the Medallion Foundation, an Alaska non-profit aviation safety organization.