More bad news for Qantas - Federal air travel tender up for grabs

It appears that what is described by its competitors as Qantas’ monopoly hold on the $500 million Federal Government annual travel budget is under threat, with last week the Federal Government putting all its domestic and international air travel up for tender.

It appears that the tenders have been divided into three, namely domestic air travel, international air travel and travel management services.

With Virgin Blue and other carriers having been vociferous opponents of Qantas’ grip on Federal Government travel, it is anticipated that the result may be that government travel will for the first time be spread more evenly between carriers, reducing income for Qantas.

In addition, this is the first time that the tender has been offered on a  whole of Government basis, not by separate government departments, with out question the bidding process going to be highly competitive, especially in the current environment of a severe downturn in corporate travel.

It is also anticipated that the tender will set new guidelines for staffers being provided with the best fare of the day and having to accept that fare, possibly irrespective of the carrier, which it appears has not been the case to date.

In addition, while Federal Government policy requires at least 25% of air travel in and out of Canberra to be booked on non-Qantas services, Virgin Blue has argued for some time that this has not been the case.

While clearly Qantas and its subsidiary Jetstar are well positioned, without question this is not good news for the boys in Coward Street as it can only mean that Virgin Blue, Tiger and other carriers will end up with some of Qantas’ business, affecting Qantas bottom line even further and also potentially affecting some of QF’s regional services

What is interesting though is that it appears that airlines will be asked to tender route by route and Federal Government insiders say that without question the final tender will very likely be shared by numerous airlines.

Interesting times ahead for Qantas and it will be particularly interesting to see how Jetstar emerges out of this process.

An Industry Insider Report by John Alwyn-Jones, eTravelBlackBoard’s Special Correspondent.