Agencies Trim Their Wings

fter years of promises, federal agencies finally achieved an elusive goal in 2001: They cut travel spending-at least a little. Direct travel expenditures-money spent on airlines, hotels, car rentals and the like-totaled $9.02 billion in fiscal 2001, down 0.4 percent from fiscal 2000. (Indirect expenditures, such as travel management staff time and travel management contract spending, aren't tracked.) The Sept. 11 attacks brought federal business travel to a virtual standstill for weeks. But since the attacks came just before the end of the fiscal year, fiscal discipline, not terror, accounts for the overall decline in travel spending.

The reduction in spending comes after many predictions and plans went awry. In 2000, spending was up 6.3 percent from the year before and was 8.1 percent higher than planned. Previous years followed a similar pattern.

More than $5 billion of the money spent in 2001 flowed through federal travel cards, up from $4.7 billion the year before. Last year was the first full year in which card use was mandatory.

The overall federal travel savings came despite the fact that the Defense Department, the government's biggest travel spender-accounting for two-thirds of the federal travel budget-overspent its revised budget by $539 million, or almost 10 percent. Frugal agencies, such as the Justice Department-which cut spending from $444 million in 2000 to $419 million in 2001-the Treasury Department ($416 million to $387 million) and the State Department ($179 million to $169 million) made up the difference. The Commerce Department had the biggest drop-from $351 million to $102 million-because it didn't have to fund census activity.

This year, Defense says it will join the ranks of the travel budget-cutters. Department officials project a 5.4 percent decline in spending in 2002. But don't be too quick to count those pennies: Defense has asked for a 5.6 percent travel budget increase in 2003, which would put the department back at its 2001 spending levels.

Other agencies are projecting big jumps in travel spending in fiscal 2002. Justice plans to spend almost 25 percent more this year than last; Treasury forecasts a 34 percent boost. Other big hikes are projected at Housing and Urban Development (24 percent), State (21.9 percent), Health and Human Services (11.8 percent) and the Environmental Protection Agency (13.1 percent). But Defense's projected decrease, and flat or slightly falling spending at other agencies, would add up to no major change from fiscal 2001 to 2002.

Going into 2003, the story will be much the same. Most agencies are expecting flat or slightly climbing travel budgets, with the biggest increases coming at Transportation and Veterans Affairs (both around 6.1 percent), and HHS and State (7.6 percent each).

On the vendor side, airline and hotel company market shares have held more or less steady. Though Avis led the car-rental pack in 2000, in 2001 it slid to second place with a 14.1 percent market share. Hertz, which was the third ranking firm in 2000 with 10.9 percent of the market, climbed to the top spot, and National slid from second to fourth, allowing Budget to move up. The list could change significantly in the coming years because some car rental firms are on the edge financially. Industry watchers expect Alamo and National, both owned by the ANC Rental Corp., to declare bankruptcy, as may Budget.