Travel Procurement: Turning Travel Banks Into Good Works
Feb 22, 2021
Like many organizations with managed travel programs, the Bill and Melinda Gates Foundation amid the Covid-19 pandemic found itself with an excess of unused air tickets far outweighing its travel needs for the foreseeable future. Asking for refunds, however, didn’t seem to fit the spirit of partnership the foundation wanted with its suppliers, as they dealt with their own financial difficulties, including layoffs and furloughs, said senior manager of global travel Stephen Gheerow.
“We thought about how it impacts us from a financial perspective, and it was money we had already budgeted and spent,” said Gheerow. “We didn’t want to go back to our partners and say, ‘Give us the money,’ because that would impact their financials as well.”
Working with supplier partners, Gheerow and his team were able to convert those unused tickets into charitable donations to four organizations aligning with its mission.
In all, the foundation has donated about $140,000 in unused tickets divided evenly across four organizations to use for their own travel needs. Unused Delta Air Lines funds went to three organizations: Feeding America, a nonprofit network of more than 200 food banks across the United States; GLAAD, a media advocacy group that promotes understanding and acceptance of the LGBTQ community; and the National Center for Civil and Human Rights, an Atlanta museum dedicated to the achievements of both the U.S. civil rights movement as well as global human rights movements. Unused American Airlines funds went to Cool Effect, an organization that supports projects to reduce carbon pollution and counteract climate change.
“We thought about our culture as an organization, what we stand for and the work we do, and we went to our partners and asked to take those funds to donate to like-minded organizations that aligned with our cultural values,” Gheerow said.
Making it Happen
The foundation first brought its idea to Delta, with which it had the largest volume of unused tickets, to vet it and make sure it was feasible, Gheerow said. As an additional appeal, the foundation intended to select as beneficiaries organizations that shared Delta’s values as well as the foundation’s. Delta indicated it was behind the idea “100 percent,” Gheerow said.
“It was very easy for us,” said Scott Santoro, Delta VP for Los Angeles and Western sales. “The team had a good idea, and these are partnerships that have the same values as Delta.”
With Delta eagerly on board, Gheerow then sought the internal buy-in necessary for the project to move forward, starting with his own travel team.
The finance and budget team was another key partner, as Gheerow wanted to be sure that the funds being donated were not accounted for in the current year’s budget. As it turned out, as the tickets already had been expensed, the finance team considered it money spent, so there was no issue there.
The foundation’s legal team was important to ensure the legality and associated liability around the donations as well as tax implications, he said.
Gheerow consulted with the foundation’s communications group, too. “They had a lot of questions, as they wanted to run it internally and see if it aligned with any existing work and also make sure this initiative spoke to our organization’s culture,” he said. That in turn helped prepare for future internal communications around the project and, eventually, external communications, as they expected suppliers would be excited to share the story with the public.
The foundation’s travel management company, CWT, also was a crucial partner, Gheerow said.
“They would be tasked with running reports and gathering information to make sure tickets were still valid, because so much was still fluid at the beginning of 2020,” he said. “Then, you also have domestic versus international, rules regarding use and validity of nonrefundable tickets and a lot of nuances in the mix. CWT helped us navigate that piece.”
For the donation, Delta waived all associated fees, such as name change fees, and the funds were given to the charity on Universal Air Travel Plan cards. UATP has facilitated charitable donations for decades, so it was simple to facilitate, UATP president and CEO Ralph Kaiser said.
With the Delta donation in place, the foundation was ready to expand on the project, Gheerow said. The team decided to focus on domestic carriers, as the bulk of its nonrefundable ticket volume was on them, and American was the next to come to the table.
The environment is a big focus area for the foundation—it made carbon offsets a part of its airline contracts a few years ago—so the team wanted the next donation to be for an environmental organization. American had an established partnership with Cool Effect, so it was a natural choice, Gheerow said. Like Delta, American was thrilled to work with the foundation on the donation, said Kyle Mabry, who recently was promoted to VP of global sales for the carrier.
“The heroes here are really the Bill and Melinda Gates Foundation, but we’re happy to be playing a supporting role in what they are doing and facilitate this generous donation,” Mabry said.
Making a Difference
Part of the vetting process in choosing the recipient organizations was confirming that they had essential travel needs, Gheerow said. As such, the donation of flight credits has the same impact as a direct cash donation, as the organizations can redirect funds they had set aside to pay for travel to instead go directly to the work they do.
“We did not get into any deep dives and stipulate how they would spend the UATP dollars, but we vetted to know they had both travel needs and a managed travel program, and that the funds would be put to use,” he said.
For Cool Effect, the funds are solving some immediate needs, said Jodi Manning, the organization’s VP and director of marketing and partnerships. Cool Effect aims to support projects that are of the highest quality, and in order to ensure that, it conducts annual site visits to review its projects, she said.
“We want to make sure both the buyer and the seller understand what is being paid and who is getting the money,” Manning said. “We go to the projects, review them, talk to the locals, talk to the management team and check on the secondary benefits and science. We have a whole team that does that work, and this is where the unused tickets are going to be a huge advantage for us.”
In particular, one project is working to restore 157,000 hectares of peat swamp ecosystem in Indonesia. The work provides clean water, prevents peat fires and preserves the habitat for the endangered Bornean orangutan and proboscis monkey, according to Cool Effect.
The organization had been planning its annual visit to that project when the Covid-19 pandemic first hit, and it will be the first that they visit once travel resumes, Manning said.
Making it Grow
As more companies over the past year have renewed social responsibility commitments amid the pandemic and social justice movements across the United States this past summer, unused tickets could be a simple source to fulfill those commitments.
The foundation already is not alone in its efforts. Deloitte recently announced it would be donating about $1 million in its unused balances across multiple airlines both to help frontline workers reach Covid-19 hotspots and to facilitate transportation of medical suppliers and protective equipment. This includes $90,000 in unused American Airlines credits to Team Rubicon, a nonprofit that taps military veterans to lead disaster relief efforts.
UATP’s Kaiser said that there a billions of dollars remaining in unused tickets floating about. The network is available to facilitate regardless of the original form of payment or whether a carrier is a UATP issuer, he said.
Both American’s Mabry and Delta’s Santoro said they are seeing increasing interest in donations from clients, and thanks to early adopters like the Bill and Melinda Gates Foundation, the framework is in place. “As a result of this idea, we’ve given every sales representative the ability to use it at this moment in time,” Santoro said.
Gheerow also had approached his other major domestic carriers regarding the donations idea, and while they were not able to facilitate them at that time, they were cooperative in working with the foundation on its unused funds, and at least one of them has since put a donation program in place.
Gheerow said he’d like to see it extend beyond the pandemic, as even before the myriad Covid-19 cancellations, it was fairly typical for companies to end the year with some balance of unused tickets. The U.S. carriers during the pandemic have permanently ended most change fees, which also will make it easier going forward.
Although the foundation at its heart is a charitable organization, the unused ticket donation boils down to the equivalent of about a $140,000 charitable donation, Gheerow said.
“This is not millions of dollars in donations and is not a heavy lift on resources, so it’s not something out of reach for most organizations that have these types of tickets in their banks,” he said. “Maybe this could be a template moving forward.”
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