The federal government has contracted with a California-based precious-metals trader for thousands of discount airline travel coupons to use on government business trips.
A-Mark Financial Corp. of Beverly Hills, Calif., said it has agreed to supply the General Services Administration with 4,000 American and United airlines half-price coupons, which must be used by Dec. 15.
The government will pay between $45 and $55 to A-Mark for each coupon it uses, sources said, but will not pay for unused coupons. Payment will come not from the GSA, but from the agencies whose employes use the coupons.
A GSA spokesman said the government has used about 2,000 coupons to date -- prior to the arrangement signed last week with A-Mark -- and stressed that the new coupons are essentially on consignment, with no liability to the government if they are not used.
In addition to the large-scale contract with A-Mark, the GSA has begun to advertise for coupons in quantities of 500 or more, under the condition that the government will pay only for the coupons it uses.
A-Mark generally deal in commodities, particularly precious metals such as gold, silver and platinum. But when the two airlines began offering the discount coupons, A-Mark officials hired several college-age persons to go to airports and buy coupons from debarking passengers who got them automatically because of airline promotions.
A-Mark account executive Stephen Wonn said the firm has "the largest inventory of airline discount coupons in the world, in excess of 10,000."
According to airline industry sources, most of the coupons were purchased by A-Mark for between $10 and $20 apiece from passengers. Thus, A-Mark will be making in excess of a 100 percent profit on each coupon the government uses.
A GSA spokesman said the firm was assuming a risk because if the government wound up not using many of the coupons A-Mark would be faced with reacquiring and reselling them before they expire. The government has 30 days to use a coupon before it reverts to A-Mark.
The coupons are fully transferable and negotiable.