Australian politicians and their staff will lose their frequent-flyer privileges as part of an overhaul of travel services for the government intended to reap A$160 million ($142 million) of savings over four years.
The government appointed four domestic, 13 international airlines and five travel management service providers to supply its travel needs, Finance Minister Lindsay Tanner said in an e- mailed statement today.
Qantas Airways Ltd., a formerly state-owned airline, has picked up a majority of contracts since the government first sold shares in the company in 1995. The government spends more than A$500 million a year on travel services, Tanner said.
“We are now using the Australian government’s collective buying power to put in place a new travel deal,” he said. In addition to “reducing waste,” the change will improve competition and maintain the industry’s viability, he said in the statement.
The airlines have agreed to turn off frequent flyer and loyalty reward points for Australian government business-related travel, he said.
The loss of travel incentives “has been an issue of particular importance to me as the government has previously been unable to extract full value from such programs,” Tanner said. The domestic airlines appointed by the government are Virgin Blue Holdings Ltd., Regional Express Holdings Ltd., Qantas and its budget carrier Jetstar Airways.
Qantas said in a statement that it is “confident” of its ability to compete under the new system.