WASHINGTON -- The government's Airline City Pair Program -- which
enables federal travelers to buy private, unrestricted fares that
are up to 70% less than published business fares -- could be in
jeopardy.
Addressing attendees at the Society of Government Travel
Professionals' annual conference, Denny Clifford -- director of
government and military sales for Northwest Airlines -- said the
network carriers' inability to raise yields could force airlines to
drop out of the city-pair program.
"Carriers are looking at every single line item," said Clifford,
adding that government sales compose about 2% of Northwest's
revenue.
"Two major network carriers [United and US Airways] are in
bankruptcy and no major network airlines have positive cash
flow.
"The business traveler hasn't come back, and when they do, they
will travel at lower fares. It's a yield problem, not a load factor
problem."
Also, Clifford said Northwest is concerned about the city-pair
bid process for 2004 because the airline will be competing against
carriers that have been free to renegotiate their labor contracts
after filing for Chapter 11 bankruptcy.
"Is it a level playing field?" wondered Clifford.
In addition, Clifford said the city-pair program could suffer a
lethal blow if any airlines are teetering on the verge of Chapter 7
bankruptcy -- otherwise known as liquidation.
"We could be at that point in a few months and it could be
exacerbated if we go to war," Clifford said. "We're hanging by a
thread. All it takes is for one or two airlines to go under, and
the city-pair contract is gone."
Clifford said the General Services Administration, which manages
the city-pair program, needs to "wake up and smell the roses."
"Compromise is the name of the game," said Clifford, suggesting
that the contract should include restricted fare buckets that allow
airlines to manage yields more effectively, as opposed to unlimited
last-seat availability at a 70% discount.
While the program is still intact, federal travelers should
continue to support the program because its value is unmatched in
the airline industry, said Ted Lawson, owner of National Travel
Service in Charleston, W. Va.
Searching for and buying lower, restricted fares on the Internet
is counterproductive, he said.
"Government agencies need to look at the larger picture of
restrictions on Web fares," Lawson said. "No corporation has the
deal the government has."