Tuesday, December 18, 2012

Georgia uses private flights to slash air travel costs

(Hat tip to "Augusta Jim" - thank you very much!)

State employees are flying less and Georgia taxpayers are expected to save more than $2 million a year as a result of a change in air-travel policy Gov. Nathan Deal made.

Deal grounded state-owned airplanes and moved most official government air travel to charter-based services. The state moved in 2011 to begin selling its fixed-wing aircraft and contracted with three private charter companies, a change that is on track to lower state flight times by nearly 70 percent.

The move to private flights is part of a larger effort to streamline state employee travel, which costs taxpayers nearly $100 million a year.

Deal’s office began a review of state travel in 2011 and found Georgia was doing little to leverage its buying power, lacked a comprehensive travel policy and had few ways to audit and monitor expenses.

While the bulk of the state’s travel costs come from mileage reimbursements and car rentals, air travel represented a chance to strike a high-profile blow for cost savings, Bart Gobeil, Deal’s chief operating officer, said.

Georgia constitutional officers, top lawmakers and other high-ranking state officials are allowed to make flights at state expense for official business only.

In 2009, Gov. Sonny Perdue and the General Assembly created the Georgia Aviation Authority to manage the state’s fleet of aircraft and to give agencies a sort of travel agent. Agencies would call the authority to plan air travel and the authority would bill the agencies an average of $550 per flight hour. The actual cost to the state was closer to $2,600 an hour, but GAA’s budget absorbed costs related to maintenance, insurance and pilot and mechanic salaries.

Now, agencies still call the aviation authority to plan air travel but it contacts one of three charter companies to make it happen. The big change, however, is that agencies are now billed the full fare: an average of $1,700 per flight hour.

The results have been clear: in fiscal 2011 the state logged 1,031 flight hours on its own aircraft, only half as many as the year before. So far this year, agencies have paid for just 137 hours of flight time. If that pace holds steady, there would be only about 329 hours of flight time in the fiscal year that ends June 30.

“If you’re an agency, before, you could just say it makes sense to fly to Savannah at $550 per hour,” Gobeil said. “Now, you’re going to think twice about what is the value of the trip and am I spending state taxpayer dollars wisely.”

Meanwhile, the state has sold one plane, a KingAir C90 for $860,000, and has a contract on two others for a total of nearly $3 million, all of which goes back into the general fund.

Deal’s moveto chartered aircraft is one more businesses are also making, said Dan Hubbard, vice president of the National Business Aviation Association.

“The benefit to businesses are very often the same benefits to governments and therefore taxpayers,” Hubbard said.

Those benefits include savings from having fewer employees and less overhead and maintenance. With the charter services, the state only pays a contracted rate based on actual flight times and pilot fees.

Hubbard’s organization commissioned a study this year that found “states are recognizing there are a number of benefits to using business aviation and it has been increasing in recent years.”

Many states still own and operate aircraft, and Georgia still owns and uses some helicopters. Some states offer a mix of state planes and charter services. Deal, however, wanted the state to investigate the cost savings from moving completely to the private sector.

“This makes people realize they’re going to get charged the total cost,” Gobeil said. “It’s more efficient, more transparent.”

Three companies won bids to provide charter services: Epps Air Service Inc., FlightWorks Inc. and Inflight Medical Services International, although Gobeil said so far the state has only used Epps.

Anton Coy, who heads Epps’ charter services, said the arrangement saves the state money and risk.

“If the state owns the asset, they have to insure the asset and they’re responsible for the asset,” Coy said. “They’re avoiding all that exposure. That’s a big cost benefit to them — and to me because I’m a taxpayer, too.”

Meanwhile, the state is also creating its own travel service akin to Travelocity or Expedia for employees.

“We had no real control over how we were spending on travel,” Gobeil said.

The state is contracting with airlines, hotels and car rental companies to negotiate lower rates. The new system cuts in half the number of steps between an employee booking travel and the expenses being reimbursed.

“It helps us look at travel costs around car rentals and mileage reimbursements and helps us deter fraud, too,” Gobeil said.

Story and reaction/comments:   http://www.ajc.com

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