Delta’s Assets Get Small Boost from U.S. Government

Judge Adlai S. Hardin of the U.S. Bankruptcy Court in Manhattan ruled Monday that the U.S. government should pay Delta Airlines $14.6 million for flights the airline provided for military personnel after Delta filed for bankruptcy in September 2005. The government has withheld payment, claiming that Delta owed $26.2 million for pre-bankruptcy ticket overcharges that had resulted from a faulty Department of Defense (DOD) travel billing system, according to an Associated Press report. US Airways renewed efforts to acquire Delta this week, offering $8 billion for the airline, which is still in bankruptcy.


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Judge Hardin ruled that the government’s rights were no different from other creditors in the bankruptcy case. The General Services Administration (GSA) had instructed federal agencies not to pay Delta for the recent flights. Delta sued the government, saying that it had an annual contract with the government and the cost to the airline was accumulating at the rate of $117,000 a day, the AP says.

The GSA had requested that Delta and four other airlines return the overcharges which were for unused tickets.

The original billing problem for military flights was uncovered during a Government Accountability Office (GAO) study in 2004.

Personnel from the Department of Defense and the GAO will be testifying at a November 16 hearing of the Senate Homeland Security and Governmental Affairs subcommittee about the cost and effectiveness of the Defense Travel System (DTS), the system the Pentagon uses for commercial travel, according to The GAO released a report in September challenging DOD claims about the cost-effectiveness of the DTS and the quality of DOD supporting data.

The GAO report on the DTS concluded, “Overhauling the department’s antiquated travel management practices and systems has been a daunting challenge for DOD. While it was widely recognized that this was a task that needed to be accomplished and savings could result, the underlying assumptions in support of those savings are not based on reliable data.”

The GAO report went on to say, however, that the DOD’s ongoing efforts to reduce duplicate systems will save money. “We have reported on numerous occasions that reducing the number of business systems within DOD can translate into savings that can be used for other mission needs.” Furthermore, the shift of DTS to the BTA [Business Transformation Agency], which makes DTS an enterprisewide endeavor, should help in making DTS the standard integrated, end-to-end travel system for business travel.”

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