B-150282, DECEMBER 28, 1962, 42 COMP. GEN. 334

B-150282, DECEMBER 28, 1962, 42 COMP. GEN. 334

CREDIT CARDS - AIR TRAVEL - PROPRIETY A CREDIT CARD SYSTEM FOR THE PROCUREMENT OF PASSENGER AIR TRANSPORTATION SERVICES WHICH WOULD REQUIRE THE ISSUANCE OF A TRANSPORTATION REQUEST AFTER THE TRAVEL HAD BEEN PERFORMED, NECESSITATE CHANGES IN UNIFORM BILLING AND PAYMENT PROCEDURES, AND JEOPARDIZE THE CONTROLS DESIGNED TO MINIMIZE THE USE OF INDIRECT ROUTE AND UNAUTHORIZED TRANSPORTATION SERVICES IS NOT APPROVED.

TO THE SECRETARY OF STATE, DECEMBER 28, 1962:

WE AGAIN REFER TO A LETTER DATED NOVEMBER 8, 1962, FROM MR. WILLIAM J. CROCKETT, ASSISTANT SECRETARY, IN WHICH OUR APPROVAL IS REQUESTED OF A PROPOSED PROCEDURE WHEREBY OFFICIAL PASSENGER TRANSPORTATION SERVICES WOULD BE PROCURED BY THE USE OF AIR TRAVEL CREDIT CARDS.

AIR TRAVEL CREDIT CARDS ARE USED IN CONNECTION WITH THE UNIVERSAL AIR TRAVEL PLAN, A SYSTEM FOR SELLING AIR PASSENGER TRANSPORTATION AND RELATED SERVICES ON A CREDIT BASIS WHICH IS SPONSORED BY THE AIR TRAFFIC CONFERENCE OF AMERICA AND BY THE INTERNATIONAL AIR TRANSPORT ASSOCIATION. TO USE THE PLAN PERSONS OR ORGANIZATIONS, CALLED SUBSCRIBERS, ENTER INTOA WRITTEN CONTRACT WITH ONE OF THE PARTICIPATING AIRLINES. THE SUBSCRIBER DEPOSITS $425 WITH THE AIRLINE WHICH THEN ISSUES, AT THE REQUEST OF THE SUBSCRIBER, ONE OF FOUR TYPES OF AIR TRAVEL CREDIT CARDS IN FAVOR OF PERSONS NOMINATED BY THE SUBSCRIBER. THE CONTRACT CAN BE TERMINATED BY EITHER PARTY UPON 30 DAYS' WRITTEN NOTICE TO THE OTHER AT WHICH TIME THE DEPOSIT, LESS ANY UNPAID CHARGES, IS REFUNDED TO THE SUBSCRIBER. IF THE UNPAID CHARGES EXCEED THE AMOUNT OF THE DEPOSIT, THE SUBSCRIBER AGREES TO REMIT THE BALANCE TO THE AIRLINE.

FOR ANY TRANSPORTATION OR RELATED SERVICES REQUESTED BY THE TRAVELER AND PURCHASED AGAINST AN AIR TRAVEL CREDIT CARD, THE AIRLINE TICKET AGENT PREPARES A TRANSPORTATION RECEIPT WHICH IS SIGNED BY THE TRAVELER. THE TRANSPORTATION RECEIPT IS SIMILAR IN MATERIAL RESPECTS TO AN AIRLINE TICKET AND, LIKE A TICKET, DESCRIBES THE PURCHASED TRANSPORTATION AND IS USED FOR BILLING AND INTERLINE SETTLEMENT PURPOSES. BILLING IS USUALLY ON A MONTHLY BASIS AND WITH THE BILLING THE SUBSCRIBER RECEIVES COPIES OF OUTSTANDING TRANSPORTATION RECEIPTS ISSUED AGAINST HIS CREDIT CARD.

AS NOTED IN THE NOVEMBER 8 LETTER, YOUR DEPARTMENT HAS FORWARDED TO US FOR DIRECT SETTLEMENT A CLAIM AGAINST THE UNITED STATES FROM TRANS WORLD AIRLINES, INC., FOR THE VALUE OF TICKETS ISSUED AGAINST AN AIR TRAVEL CREDIT CARD. IT APPEARS THAT THE DEPARTMENT OF STATE, AS A SUBSCRIBER, ALREADY HAS ENTERED INTO A CONTRACT WITH TRANS WORLD AIRLINES UNDER THE UNIVERSAL AIR TRAVEL PLAN AND THAT AIR TRAVEL CREDIT CARDS HAVE BEEN ISSUED TO OFFICIALS OF THE DEPARTMENT AT THE DEPUTY ASSISTANT SECRETARY AND HIGHER LEVELS. IT IS EXPLAINED THAT AIR TRAVEL CREDIT CARDS ARE CONSIDERED ADVANTAGEOUS BECAUSE OF THE CONVENIENCE AND SECURITY OF BEING ABLE TO CARRY THE CARDS IN ONE'S WALLET. YOUR DEPARTMENT REQUESTS OUR APPROVAL OF THE USE OF THE CREDIT CARD SYSTEM UNDER THE FOLLOWING SUGGESTED PROCEDURE WHICH IS OUTLINED IN THE NOVEMBER 8 LETTER:

UPON RECEIPT OF TRANSPORTATION TICKET PROCURED WITH AIR TRAVEL CREDIT CREDIT CARD, THE TRAVELER SIGNS A TRANSPORTATION RECEIPT WHICH SHOWS THE PASSENGER'S NAME AND ORGANIZATION, PLACE AND DATE OF ISSUE, COMPLETE ROUTING, CLASS, CARRIER, FARE AND TICKET NUMBER.

THE TRAVELER WOULD PROVIDE THE DEPARTMENT WITH A COPY OF THE TRANSPORTATION RECEIPT WHICH WOULD SERVE AS THE BASIS FOR THE DEPARTMENT TO PREPARE THE UNITED STATES OF AMERICA TRANSPORTATION REQUEST, STANDARD FORM 1169 WHICH WOULD THEN BE FURNISHED THE CARRIER FOR NORMAL PROCESSING.

THE USE OF A CREDIT CARD SYSTEM FOR THE PROCUREMENT OF PASSENGER AIR TRANSPORTATION SERVICES MAY HAVE THE LIMITED ADVANTAGE OF CONVENIENCE TO THE TRAVELER. HOWEVER, USE OF THE SYSTEM HAS THE EFFECT OF DEFEATING THE PURPOSE OF OUR REGULATIONS WHICH ARE DESIGNED TO ESTABLISH UNIFORMITY IN THE PROCUREMENT OF, AND PAYMENT FOR, PASSENGER TRANSPORTATION SERVICES FOR THE ACCOUNT OF THE UNITED STATES, IN ADDITION TO FACILITATING THE PERFORMANCE OF A PROPER AUDIT OF THE TRANSACTIONS IN OUR OFFICE.

UNDER THE PROCEDURE PROPOSED BY YOUR DEPARTMENT THE TRANSPORTATION REQUEST WOULD BECOME AN ADDITIONAL DOCUMENT IN SUPPORT OF THE CREDIT CARD BILLING AND WOULD BE ISSUED SUBSEQUENT TO THE DATE OF TRAVEL. WE HAVE BEEN OPPOSED TO THE ISSUANCE OF A TRANSPORTATION REQUEST AFTER THE SERVICE HAS BEEN PERFORMED. SEE 7 COMP. DEC. 76 (1900) AND B 20792, DECEMBER 2, 1941. APPROVAL OF THE CREDIT CARD SYSTEM WOULD CHANGE OR REQUIRE CHANGES IN WELL-ESTABLISHED AND RELIABLE BILLING AND PAYMENT PROCEDURES; AND LOSS OR IMPROPER USE OF THE AIR TRAVEL CREDIT CARD COULD RESULT IN SUBJECTING THE GOVERNMENT AND THE HOLDER OF THE CARD TO POSSIBLE LIABILITIES. FURTHER, CONTROLS OVER THE PROCUREMENT OF OFFICIAL PASSENGER TRANSPORTATION, DESIGNED TO MINIMIZE THE USE OF INDIRECT ROUTE AND UNAUTHORIZED OR PREMIUM TRANSPORTATION SERVICES, WOULD BE SERIOUSLY JEOPARDIZED. ALSO, IT MAY BE NOTED THAT THE CONVENIENCES INHERENT IN THE USE OF THE CREDIT CARD SYSTEM, EVEN WHEN LIMITED TO OFFICIALS OF THE DEPARTMENT AT THE DEPUTY ASSISTANT SECRETARY AND HIGHER LEVELS, DO NOT SERVE TO REDUCE ADMINISTRATIVE HANDLING, SINCE THE CREDIT CARD SYSTEM WOULD BE IN ADDITION TO THE PROCEDURES NOW AUTHORIZED FOR THE PROCUREMENT OF OFFICIAL PASSENGER TRAVEL.

IN THESE CIRCUMSTANCES, WE ARE UNABLE TO APPROVE THE CONTINUED USE BY THE DEPARTMENT OF STATE OF THE UNIVERSAL AIR TRAVEL PLAN. WE FEEL THAT THE INTERESTS OF THE UNITED STATES IN THE PROCUREMENT, PAYMENT, ACCOUNTING FOR, AND AUDIT OF THE TRANSPORTATION TRANSACTIONS INVOLVED WOULD BEST BE SERVED BY CONTINUED ADHERENCE TO THE PRESENTLY PRESCRIBED PROCEDURES, AND THAT ACTION SHOULD BE TAKEN BY YOUR DEPARTMENT TO TERMINATE THE CONTRACT WITH TRANS WORLD AIRLINES. CARRIER BILLS FOR SERVICES PROCURED BY USE OF THE CREDIT CARD SYSTEM SHOULD BE REFERRED TO OUR TRANSPORTATION DIVISION FOR DIRECT SETTLEMENT, TOGETHER WITH AN ADMINISTRATIVE REPORT OF THE SERVICES AUTHORIZED, RECEIVED, AND ADMINISTRATIVELY APPROVED FOR PAYMENT.