Travel budget cut, but shuttles thrive
Within 48 hours of taking office, President Ronald Reagan signed an executive order to cut $300 million out of the govvernment's $3.7 billion travel budget. Since then, some of the airlines operating in and out of Washington report business is up.
For example, Eastern Airlines says that the number of passengers on its shuttle service between New York and Washington was up 13 percent in January, and New York Airways, making the same run, likewise reports that February traffic increased by 9.31 percent over January traffic, which was up 16 percent over December.
(This wouldn't be the first time government travel increased after a budget cut. Last year, after a $500 million cut -- prompted by Sen. James R. Sasser [D ] of Tennessee -- the government spent more than it budgeted before the cut.)
In spite of the bright spot in the northeast Corridor, the airlines and rental car companies are bracing themselves for the crunch. The government, for the most part, is their single largest customer. According to a recent Office of Management and Budget survey, some 20,000 government employees are in the air every day. A large proportion of those rent cars upon arriving at their destination and a percentage of those also rent hotel rooms.
Thus, it's not surprising that William Mckenna, vice- president of public affairs for Hertz, RCA's rental car subsidiary, says of the cutback order, "It's not good news; it's going to be a question of how bad it will be. We will just have to try to get a bigger piece of a smaller pie."
Bemiss Rolfs, president of national Car Rental, agrees that President Reagan's order will have an impact on its business of renting 400,000 cars a month, but he adds, "I don't think we can quantify it yet."
And, at Avis, James Calvano, president says, "If the cutback is effective, we will see less government rental of cars," but he adds, "even though the government is the single largest customer, we are only talking about a $40 million to $50 million customer in a $3 billion north American market."
Mr. Calvano says he anticipates that any government travel cutback will hit other forms of transportation and the hotel and motel industry even more.
At the airlines, the expectations are for less government travel. "If there is a cut," says a spokesman for United Airlines, the nation's largest domestic carrier, "we will probably see a reduction in traffic, but by what percentage, we don't know."
And Trans World Airlines Inc. says that even though traffic between Washington and Los Angeles and San Francisco is down 14 percent, the decline reflects "general business conditions," rather than a cutback in government spending.
An American Airlines spokesman in Dallas/Fort Worth agrees it's too early to tell what impact the cuts will have. Additionally, he says the airline is watching the effect of the General Service Administration's block bids on its business. Neither American or United have participated in these bids for large blocks of government travel.
Not all the airlines consider the government's travel cuts a loss of business. For example, New York Air, in business since December, became the GSA's airline in the government's second round of block bids, recently completed. New York Air offers a $29 fare between New York and Washington for GSA employees, compared with $59 for a normal Eastern shuttle flight, and $37 for a metroliner fare during peak hours between New York and Washington. "You can have more travel, but have it cost less," says Bruce hicks, a New York Air spokesman.
And, the American spokesman adds that the administration's big push for defense spending could lead to even more travel by the government. "There could be some offsetting traffic," he states.
Even if government airline traffic does turn down, the airlines say they are better equipped to weather it. Comments the United spokesman, "We've reduced the size of the airline, which you couldn't do before deregulation. We're reducing assigned seat miles to reflect more what the business is by reducing unprofitable routes and low traffic cities."
Tclosely. A spokesman for ITT Sheraton says that so far the hotel chain hasn't seen any slowdown or decrease in the number of government travelers. But he adds, "It's still too early to tell the impact of the order, although we're trying to assess it."
holiday Inns, like a lot of other companies affected by the President's order , is not eager to talk about the proposed cutback. "We really don't have very much to say," comments a spokeswoman in Memphis, its headquarters.