Government Should Recover Cost of Processing Airline Passengers Not on Official Business

Published by the Government Accountability Office on 1977-05-11.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

                         DOCUMENT RESUME
02257 -   A1392385]
[Government Should Recover Cost of Processing Airline Passengers
Not on Official Business]. LCD-76-230; B-133025. May 11, 1977. 4
pp. + 1 enclosure (1 pp.).

Report to Harold Brown, Secretary, Department of Defense; by
Frei J. Shafer, Director, Logistics and Communications Div.

Issue Area: Facilities and Material Management: Federal
    Transportation of Things (704); Personnel Management and
    Compensation (300).
Contact: Logistics and Communications Div.
Budget Function: National Defense: Department of Defense -
    Military (except procurement   contracts) (051).
Congressional Relevance: Honse Committee on Armed Services;
    Senate Committee on Armed Services.
Authority: Airport and Airway Revenue Act of 1970.

          From fiscal year (FY) 1968 through the first quarter of
FY 1976, some 2.8 million people not on official business
traveled free on Department of Defense-controlled aircraft.
These individuals ere mainly active-duty or retired military
members and their dependents who traveled worldwide for personal
reasons on a space-available basis. Findings/Conclusions: Basel
on an average processing cost at military air terminals of $17
per person, the cost in FY 175 to handle 460,000
spaze-available was $7.8 million. The Air Force also pays a $3
departure tax for each passinger leaving the U.S. on commercial
aircraft. Space-available passengers have not been charged for
terminal processing or departure tax. In 1976 GAO recommended
collecting a service charge for terminal processing using the
inflight meal collection system. The Assistant Secretary of
Defense agreed with collecting the departure tax, but not a
processing fee, because be maintained that no additional
staffing or costs are required for space-available passengers.
Recommendations: The Secretary of Defense should reconsider the
DepartmeLt's position. Assessing a nominal processing charge
would assure continuation of full space-available benefits
without adding to Government costs, and would eliminate the need
to further reduce terminal staffing. (DJM)
                      WASHINGTON, D.C. 20

   M                                                MAY I 1 W

The Honorable
The Secretary of Defense
Dear Mr. Secretary:
     About 2.8 million individuals nt on official duty
traveled free on Department of Defense-controlled aircraft
from fiscal year 1968 through the first quarter of fiscal
year 1976. Most of these individuals were 3ctive-duty or
retired military members and their dependents traveling
worldwide for personal reasons on a space-available basis.
     Although the percentage of non-duty passengers traveling
free on Department of Defense-controllee aircraft has in-
creased from about 9 percent in fiscal year 1968 to about
24 percent in fiscal year 1975, the total number of space-
available passengers has remained fairly constant. A table
showing the number of passengers airlifted each year from 1968
through the first quarter of 1976, the number of space-available
passengers, and the percentage of total passengers that space-
available travelers represent is included as an enclosure to
this letter.
     Passengers traveling on a space-available basis composed
a significant portion of the passenger processing workload at
MAC terminals. We did not attempt to identify the incremental
costs involved in processing space-available passengers. How-
ever, based on the average cost to process a passenger at
military air terminals ($17), the cost to process the 460,000
space-available passengers handled in fiscal year 1975 was
about $7.8 million.
     In addition, the Air Force pays a $3 tax under the Air-
port and Airway Revenue Act of 197C for each passenger depart-
ing the United States on commercial aircraft. Total payments
since 1970 for passengers not on official business have
amounted to about $850,000. Space-available passengers were
not charged for terminal processing, nor were they asked to
reimburse the Air Force for the tax paid on their behalf.

     We pointed out, in a draft report dated June 3, 1976,
that commercial airlines recover a nominal fee from their
employees for any space-available transportation they are
provided. The airlines said the charge was made in an at-
tempt to recover passenger processing costs and applicable
taxes. We suggested that the Defense Department consider
collecting from space-available passengers a service charge
for terminal processing. We also suggested that the Defense
Department collect the $3 tax from these travelers.
     We also pointed out that the present collection system
established to collect money for inflight meal. on military
aircraft could be used to collect the processing ad tax cost.
Terminal and base financial officials informed us that the
collection of a service charge from space-available passengers,
utilizing the inflight meal system, would result in little or
Ao increase in their orkloads.
     Commenting on our report, the Assistant Secretary of
Defense (Comptroller) agreed to ccllect the $3 tax from each
space-available passenger departing the United States on com-
mercial flights. He said that any additional cost incurred
in collecting the tax would also be collected by adding a
     The Assistant Secretary did not agree with our position
that a service charge for terminal processing should be col-
lected from passengers traveling space-available. His posi-
tion was that no additional costs over those needed to process
official duty passengers should be incurred for the handling
of space-available passengers. He said that this position is
in consonance with the Air Force's assurances that its ter-
minals are staffed to accommodate only the space-required
passengers. Further, he said that the Defense Department
would maintain surveillance over the staffing of terminals to
assure that the processing of space-available passengers is
not used as a basis to incur additional costs to the Defense
     We believe that the osition taken by the Assistant Sec-
retary could result in a significant curtailment of a long-
standing fringe benefit. The argument that space-available
passengers can be processed at no extra cost ignores the
total volume of space-availdble passengers as well as the
amount of work required to process such passengers.


      As mentioned earlier, the percentage of space-available
passengers compared to total passengers   airlifted by MAC has
risen continuously from 9 percent in fiscal year 1968 towe
24 percent in fiscal year 1975--the last year for which
have complete figures. Moreover, for the 3-month period
ending September 30, 1976, records of MAC's 21st Air Force
show that the space-available workload represented 40 percent
or more of the total workload   at 17 of its terminals. Ata one
such terminal, Dover Air Force Base, which is basically
cargo terminal, 44 passenger processing personnel handled
999 official duty and 1,660 (62 pe:cent) space-a:railable
passengers during the aforementioned 3-month    period. Taking
away the space-available   workload leaves the  highly question-
 able practice  of keeping a passenger terminal  open 24 hours a
day, 7 days a week, to accommodate an average of 11 official-
 duty passengers a day.
      If the Defense Department and the Air Force maintain
their position that its terminals are to be staffed to accom-that
mcldate only space-required passengers, we are confident of  ter-
an indepth staffing study will result  in  a   reduction
minal processing spaces and necessitate   a  curtailment  of
space-available travel. We believe a more reasonable      posi-
tion would be to assess a service charge    to  cover terminal
processing costs as administered by commercial airlines to
their employees.
     We therefore recommend that you reconsider the Defense
Department's position. Assessing  a nominal processing charge
would assure continuation of full space-available benefits
without adding to Government costs, and would eliminate the
need to further reduce terminal staffing.

      %ith respect to the amount of the service     charge--we
 did not attempt to establish  incremental   costs  incurred in
 processing space-available passengers. Such costs      would
                                 and would
 vary widely between terminals compute.     require  significant
 amounts of time and labor to              Rather, we envision
 a reasonable service charge  to  be more  easily determinable,
 computed from a model such as the   average  cost to process a
 passenger through MAC terminals.
      As long as there are unused seats that could be used a
 space-available passengers we see  no reason to jeopardize
 longstanding fringe benefit if  Government  costs are not in-
 creased. Given a choice between curtailment    of the benefit,
 or paying a nominal service charge,  we are  certain travelers
 would select the latter option.

     As you know, section 236 of the Legislative Reorganizaticin
Act of 1970 requires the head of a Federal agency to submit a
written statement on actions taken on our recommendations to
the House Committee on Government Operations and the Senate
Committee on Governmental Affairs not later than 60 days after
the date of the report, and to the House and Senate Committees
on Appropriations with the agency's first requests for appro-
priations made more than 60 days afte. the date of the report.
     We are sending copies of this report to the Director,
Office of Management and Budget; the Chairman, the House Com-
mittee on Government Operations; the Chairman, the Senate Com-
mittee on Governmental Affairs; the House and Senate Commit-
tees on Appropriations, and Armed Services; and the Secretar-
ies of the Army, Navy, and Air Force.
                              Sincerely yours,

                              F. J. Shafer

Enclosure I                                           Enclosure I

                                    Passengers provided
                             space-available transportation
                Total       On MAC-      On other
              passengers   controlled    Defense-     Percent
Fiscal        airlifted     aircraft    controlled    of total
 year          (note a)     (note b)     aircraft    passengers

                ---------- (000   omitted) --------

  .968           2,978            278        (c)          9%
 1969            3,256            336        (c)         10
 1970            3,263            373        (c)         11
 1971            2,906            360        (c)         12
 1972            2,243            336        (c)         15
 1973            1,721            310        (c)         18
 1974            1,438            286        (c'         20
 1975            1,883            305        155         24
 1976              472             66         34         21
   (note d)

    Total       20,160        2,650          189         14%

a/Includes Defense Department pat-   ers provided transporta-
  tion on scheduled commercial flights.

b/Kilitary Airlift Command.
c/Prior to 1975, records were not maintained on space-available
  travelers using other than MAC-controlled aircraft.
d/First quarter.