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Federal Acquisition Service U.S. General Services Administration December 2007 Airline Briefing City Pair Program Airline Industry Desired Changes and.

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Presentation on theme: "Federal Acquisition Service U.S. General Services Administration December 2007 Airline Briefing City Pair Program Airline Industry Desired Changes and."— Presentation transcript:

1 Federal Acquisition Service U.S. General Services Administration December 2007 Airline Briefing City Pair Program Airline Industry Desired Changes and Government Findings FY 2009 Solicitation

2 Federal Acquisition Service 22 Discussion Topics – Considered Pre-Determination Outline desired changes and action items identified at November 1, 2007 Airline Industry and Customer Forum Present findings Discuss and evaluate findings Next Steps

3 Federal Acquisition Service 3 Background November 1, 2007 Airline Industry Forum Airlines represented: American, United, Delta, Northwest, AirTran, Mesa, and Midwest Government represented: NSF, VA, HUD, GSA, SSA, DOI, NASA, State, Treasury, Coast Guard, NBC, EPA, DHS, DOE, PBGC, Ed, DOD, AMC, TRANSCOM Discussed desired changes the airline industry would like made to the FY 2009 City Pair Program (CPP) solicitation and contract Requested changes that align with commercial practices Ticketing Time Limits (TTL) be applied to CPP tickets –Reduces spoilage Implement Penalty Fees –For changes, cancellations or re-issuing of tickets

4 Federal Acquisition Service 4 Ticketing Time Limits (TTL) 1.Evaluate the impact TTL would have on current booking and ticketing practices including financial impact 2.Develop a standard definition for TTL 3.Impact of Continuing Resolutions on Governments ability to purchase tickets if TTL is implemented 4.Evaluate ticket refund/reimbursement cycle-timeline along with SmartPay card refund cycle-timeline and the impact on individually billed account card holders 5.Assess programming requirements for Defense Travel System and E-Gov Travel Service to accommodate TTL 6.Identify impacts of increased changes/cancellations to reservations and re-issued tickets i.e. travel agency fees 7.Assess overall cost impact Implement Penalty Fees 1.Assess overall cost impact Action Items to Evaluate

5 Federal Acquisition Service 5 Ticketing Time Limit Findings

6 Federal Acquisition Service 66 Typical government practice: Hold ticketing to retain flexibility and change w/o fee Tickets are issued a mean of 4 days prior to departure *86% are purchased 7 days or less prior to departure 12% issued day of departure 14% issued 1 day prior to departure 9% issued 2 days prior to departure 12% issued 3 days prior to departure 19% issued 4 days prior to departure 14% issued 5 days prior to departure 4% issued 6 days prior to departure 2% issued 7 days prior to departure 1. Evaluate the impact TTL would have on current booking and ticketing practices including financial impacts

7 Federal Acquisition Service 7 1. Evaluate the impact, continued Behavior – Book _CA as far in advance as possible Day 7 Determination or opt for YCA with in 7 Days Unable to forecast traveler response to TTL It is expected the transaction costs would rise to cover costs of changes made to tickets after issuance Explore the possibility of a TTL test at one or more Agencies Assess traveler and financial impacts

8 Federal Acquisition Service Develop a standard definition for TTL TTL – Airline goal to get seats back in inventory with time to resell TTL - May be based either on a set amount of time before flight departure or a set amount of time after a reservation is made Regardless of the type of time limit, reservations for flights in YCA or _CA may be made up to the time of flight departure subject to seat availability

9 Federal Acquisition Service 99 Assuming a 7 day TTL ACTION Reservation made months prior to departure Issue ticket 7 days prior to departure Reservation made 10 days prior to departure Issue ticket 7 days prior to departure Reservation made 7 days prior to departure Issue ticket immediately or within 24 hours after reservation is made Reservation made 6 days or less prior to departure Issue ticket immediately or within 24 hours after reservation is made Reservations not ticketed 7 Days prior are automatically cancelled 2. Develop a standard definition for TTL, continued

10 Federal Acquisition Service 10 The Governments use of Continuing Resolutions to fund its operations appears to have minimal impact on proposed TTL The Government funds essential travel under a Continuing Resolution A number of Agencies are funded differently The last Government shut down occurred in intermittently for total of 18 business days 3. Impact of Continuing Resolution on Governments ability to purchase tickets if TTL is implemented

11 Federal Acquisition Service 11 Background: Airfare is booked through Defense Travel System, E-Gov Travel Service or travel agencies (CTOs, TMCs) Domestic airfare paid for by the SmartPay card SmartPay cards can be: Centrally Billed Accounts (CBA) –Refunds are returned directly to the agencys CBA Individually Billed Accounts (IBA) –Individuals are responsible for on-time payment in full of their account –Ticket refunds are credited to the travelers IBA Agencies receive incentives for timely payment of SmartPay accounts 4. Evaluate ticket refund/reimbursement cycle- timeline along with SmartPay card refund cycle- timeline and impact on individually billed account card holders

12 Federal Acquisition Service Airline ticket refund/reimbursement cycle and timeline Payment for cancelled ticket may be due to SmartPay before refund is processed Travelers must pay their IBA in full, even if the refund for the cancelled ticket has not been credited Day 1-7 CTOs/TMCs process sales daily Charges on IBA and CBA within hours of ticket issue Day 7 Refunds processed by CTOs/TMCs weekly – batched and sent to Airline Reporting Corporation (ARC) Day 7-14 ARC validates refunds Day 14 Refunds batched and sent to Visa/MasterCard Day Day Process at Visa/MasterCard Day 17 Refunds sent to banks Day Refunds provided to IBA/CBA

13 Federal Acquisition Service SmartPay billing and payment cycle IBA holders have 21 days from billing date to pay account in full Refund Process takes Days Minimally Assuming CTO/TMC Process Weekly No. of Calendar Days from Closing Date Suspension Procedure 30 Days Billing Cycle 0 Bill Released 21 Days Payment Cycle 46 Days Request payment from the individual cardholder on past due account 55 Days Begin suspension process 61 Days Account may be suspended, unless otherwise directed by the A/OPC Source: Smart Pay Contract

14 Federal Acquisition Service Scenario of Transactions and Contractor Actions regarding account Combined Refund and Billing / Payment Cycles DAYSCURRENT PROCESS7 Day TTL 30 Days Billing Cycle 21 Days Payment Cycle -7 Days Not ApplicableTicket Issued – CTO/TMC Transaction Fee charged -5 Days SmartPay bill is sent to IBASmartPay Bill is sent to IBA - Includes Ticket Charges and Transaction Fee -4 Days Normally Ticketed - Trip Canceled (no impact with current practice) Trip Canceled – Advise CTO / TMC to begin refund process. Transaction Fee still applies 0 Days IBA Holder receives BillIBA Holder receives bill Ticket Charges and Transaction Fee included on bill IBA holder cannot dispute charges Begin Voucher Process for Transaction Fee +16 Days Bill due to Visa/MasterCard IBA holder must pay for ticket that is being refunded or be in default Pay Transaction Fee and Voucher Fee +30 Days Next Billing Cycle closes new bill issued for current charges Previous bill Past Due +46 Days Not ApplicableRequest Payment from IBA holder on Past Due Account +55 Days Not ApplicableBegin Suspension Process +61 Days Not ApplicableAccount may be suspended, unless otherwise directed by the A/OPC Suspension must be initiated

15 Federal Acquisition Service Corporate Practices Model: Negotiated Air Programs Fare BucketsDiscount percentages Tier 1F, B, Full coachXX% Tier 2 B,H,M Range: Low XX% to X% Tier 3Lower bucket non-refundable Range: Low X% to none* The more restrictive and lower in cost the fare – the smaller the percentage of corporate discount Tickets purchased based on fare rules Refund process If using corporate card on a refundable ticket and trip is cancelled, traveler requests a charge suspension until refund is issued Traveler has been provided an advance, must refund company and company takes on administrative job to track Few corporations require the traveler to float the expense For non refundable tickets company must manage the inventory – most common situation Need information on refund process for BSP and Non-ARC airlines

16 Federal Acquisition Service Assess programming requirements for Defense Travel System and E-Gov Travel Service to accommodate TTL Defense Travel System still evaluating the impact CTO – May Require Contract Modification DTS – System Change – Impact unknown at this time E-Gov Travel Service - TTL will have minimal impact CTO/TMC – minimal impact as TTL is loaded into Fare Rules for auto cancellation

17 Federal Acquisition Service 17 Data is not available to compute financial impact, estimates are: CTO/TMC fees CTO/TMC fees to issue a new ticket – average fee $27.36 (domestic) DTMO - $20.00 Full Service - $10.00 Self Service Voucher fees Average voucher cost is $12.63 (domestic) YCA_CA shift $157 average savings from YCA to _CA 6. Identify impacts of increased changes/cancellations to reservations and re-issued tickets i.e. travel agency fees (CTO/TMC)

18 Federal Acquisition Service 18 Implement Penalty Fee Findings

19 Federal Acquisition Service Assess overall cost impact of penalty fees - Notional Assume 5% tickets Assume 10 % tickets 200,000 tickets400,000 $50 fee $10,000,000 Cost to $50 fee $20,000,000 Cost to $100 fee $20,000,000 Cost to $100 fee $40,000,000 Cost to Govt Penalties Assume 4,000,000 round trip tickets are issued Estimate for $50 and $100 per ticket penalty fee Consider - No Show Fee vs Cancellation Fee

20 Federal Acquisition Service 20 Impact of TTL and Penalties CTO/TMC Fees Voucher fees YCA-CA shift Change and Cancellation Penalties Additional considerations: Administrative and traveler time costs – undetermined Delinquency impact on agencies and IBA holders

21 Federal Acquisition Service 21 Discuss findings Next Steps


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