Out of the Clouds

Travel spending loses altitude with big decline at Defense.

The fiscal 2005 travel spending boom, driven by increases at the Defense Department, hit the brakes in 2006, with expenditures down $1.3 billion to $14.1 billion, according to the Office of Management and Budget. After a $2 billion rise the previous year, military-related spending dropped $1.8 billion to $9.1 billion.

This is the first time travel spending has dropped in recent memory, thanks to the decline at the Pentagon. But the rest of government spent more on flights, auto rentals and hotels in 2006. Hefty increases were seen at nearly all the largest agencies. And civilian agencies' portion of the government travel budget has risen from about a third in 2005 to nearly 50 percent.

The Homeland Security Department's travel spending jumped $124 million to $1 billion. The Justice, State and Treasury departments all saw increases of just over $50 million. The Transportation, Interior and Agriculture department travel budgets each jumped more than $20 million while the Veterans Affairs Department saw a $45 million increase to $393 million.

The only other civilian agency with a significant decrease was the Health and Human Services Department, where spending was down $11 million to $226 million. Others, such as the Securities and Exchange Commission and the departments of Education and Housing and Urban Development, saw smaller declines ranging from about 5 percent to 20 percent. The General Services Administration, a self-sustaining agency experiencing financial difficulties, saw travel spending dip $3 million to $39 million.

Agencies spent nearly $3.3 billion of their travel dollars on airline tickets in 2006, down from $3.4 billion in 2005, according to GSA. Another $2.3 billion was spent on hotel rooms, up from $2 billion. And auto rentals jumped to $423 million from $378 million the previous year.

United Airlines tightened its grip on the top spot among commercial carriers with $842 million in sales and 25.7 percent of the market. Delta Air Lines came in second with $631 million, or 19.3 percent. American Airlines is in the third spot with $570 million in sales and a 17.4 percent market share. United, Delta and American have more than 62 percent of the federal airline ticket market, with other competitors, led by U.S. Airways, all falling short of a 10 percent market share.

Federal travelers are far more diverse in their lodging selections. No hotel chain had more than 7 percent of the market in 2006, and nearly 42 percent of the market consists of hotels outside the top 26 chains. Marriott, Holiday Inn, Residence Inn and Hilton Hotel continued to be the most popular destinations in 2006. Consistent with past years, Hertz Corp. remains the government's favorite car rental dealer, bringing in $79.2 million, or 18.7 percent of all car rentals. Avis moved ahead of Enterprise Rent-a-Car for the No. 2 spot, followed by Budget and National.