Federal air travel tender to hit Qantas

[Dave Noble]

QANTAS'S stranglehold on the $500 million Federal Government annual travel budget is under threat, after the Commonwealth put up for tender yesterday its entire domestic and international air travel needs.

The Department of Finance put up three separate tenders, one for domestic air travel, one for international air travel and the other for travel management services for the ''whole of Australian government''.

The move is expected to settle once and for all complaints from airlines such as Virgin Blue that Qantas gets an unfair share of the lucrative public servant travel budget. It is also the first time the tender will not be awarded by separate government departments.

Full article at Federal air travel tender to hit Qantas

Dave

 

[drron]

Until the details of the tender emerge I dont see how you can say QF will lose.If it is on a route by route basis it certainly is possible.If they were silly enough to do it as a single tender QF would win.
Will be interesting though.

 

[Dave Noble]

The article doesn't say that Qantas will lose, just that they have the most to lose

I can't see why Qantas would be guaranteed to win a domestic contract

Dave

 

[harvyk]

Given that QF have the largest route network in australia I would almost say it's a no-brainer, especially for some of the more regional departments. That said, I would have also thought that a "whole of government" thing was also a pretty dumb idea, and yet look what's happening.

Also I love the complaint from DJ stating that QF gets an unfair share. QF like DJ are both businesses which have to compete, nothing more. When DJ first came out they went in as a LCC aiming for the leasure market. It's only because AN failed that they decided to also go for the gov't \ corporate market.

Should I put up a stink because there are companies out there who are more engrained with gov't than me?

Either way, both QF and DJ have a lot to loose because of this, I wouldn't want to be in either of their shoes right now...

 

[Travel Guru]

Given that QF have the largest route network in australia I would almost say it's a no-brainer, especially for some of the more regional departments. That said, I would have also thought that a "whole of government" thing was also a pretty dumb idea, and yet look what's happening.

Also I love the complaint from DJ stating that QF gets an unfair share. QF like DJ are both businesses which have to compete, nothing more. When DJ first came out they went in as a LCC aiming for the leasure market. It's only because AN failed that they decided to also go for the gov't \ corporate market.

Should I put up a stink because there are companies out there who are more engrained with gov't than me?

Either way, both QF and DJ have a lot to loose because of this, I wouldn't want to be in either of their shoes right now...

Sorry, I've got to pick you up on 2 things:

Firstly I disagree with your comment that QF have the largest route network, perhaps if you include JQ they do, but on a straight QF v. DJ comparison, DJ have a far better network in my opinion.

Secondly, DJ came into the market after AN collapsed, so it wasn't AN's collapse that prompted them to go after the corporate market, but was more likely AN's collapse which prompted them to enter it in the first place.

TG

 

[serfty]

Before Ansett went under the pie was split somewhat.

My brother work in Canberra for the AEC which had AN as their preferred supplied. He was multi star in Global rewards.

He was seconded to on a role with a task force to assist in getting Australians of indigenous heritage to vote more often under the old "dept of Aboriginal Affairs" who were with Qantas.

Flying J around the outback on 146's he very quickly had status with QFF as well.

 

[notzac]

Secondly, DJ came into the market after AN collapsed, so it wasn't AN's collapse that prompted them to go after the corporate market, but was more likely AN's collapse which prompted them to enter it in the first place.

My recollection is fairly hazy but I seem to recall DJ started up just before AN fell apart completely.. is that correct?

 

[Flymethere]

Ok...call me crazy...this idea is waaaaaaay out there...how about just booking the cheapest and most reliable flights (excluding Tiger based on the reliability part)?

I would love to see a comparison of the tender proposal (actual costs) over 2 years compared to just booking cheapest and most realiable costs.

 

[Mal]

The tender details are available (and would make a great read!), but you need to register and get authorisation to access the details... they are also Government confidential.

So that spoils my plan of learning all about Government travel and what they expect to use.

It will be interesting how this goes. Qantas does have the most to lose, but they also are in a good position. Virgin Blue has a lot to lose as well, as currently there is a mandate for some Virgin Blue domestic travel which may not be retained after the tender closes. Certainly some of my Fed public servant friends have been forced to travel Virgin Blue at times.

The International one is also of interest. Will be interesting to see who wins that, and which travel management company the Govt will have the 'pleasure' to deal with!

 

[nlagalle]

Secondly, DJ came into the market after AN collapsed, so it wasn't AN's collapse that prompted them to go after the corporate market, but was more likely AN's collapse which prompted them to enter it in the first place.

Sorry, but DJ was here a year before AN went under.

Virgin Blue - Wikipedia, the free encyclopedia

Virgin Blue started operations in August 2000. Ansett collapsed around the 14th September 2001 (Until the 9/11 attacks the front page on that day was going to be about Ansett about to go under, but it was pulled..)

In fact DJ used terminal 4 at MEL and wasn't til Ansett was gone that they got access to Terminal 3 in Melbourne.

Cheers,

Nick

 

[harvyk]

Sorry, I've got to pick you up on 2 things:

Firstly I disagree with your comment that QF have the largest route network, perhaps if you include JQ they do, but on a straight QF v. DJ comparison, DJ have a far better network in my opinion.

Secondly, DJ came into the market after AN collapsed, so it wasn't AN's collapse that prompted them to go after the corporate market, but was more likely AN's collapse which prompted them to enter it in the first place.

TG

Yes I'm including JQ and QF Link. Yes there are some destinations which DJ does which QF (Link \ JQ) doesn't, but until recently DJ was major cities only. (the E-jets changed that a little).

And 2 - Wrong, but others have picked you up on that...

 

[Dave Noble]

Yes I'm including JQ and QF Link. Yes there are some destinations which DJ does which QF (Link \ JQ) doesn't, but until recently DJ was major cities only. (the E-jets changed that a little).

Including Qantaslink in routes seems perfectly reasonable since they are alll sold as Qantas, but including JQ seems that it could be flawed since it is separate

QF vs DJ seems a fair comparison but QF+JQ vs DJ doesn't to me

Dave

 

[Travel Guru]

Yes I'm including JQ and QF Link. Yes there are some destinations which DJ does which QF (Link \ JQ) doesn't, but until recently DJ was major cities only. (the E-jets changed that a little).

And 2 - Wrong, but others have picked you up on that...

My apologies, i've just exposed to the world how bad my long term memory is!! Sorry.

 

[Groundfeeder]

Ansett collapsed around the 14th September 2001

Sob...it's OK, I'm nearly over it...

Our QLD Govt travel was previously handled by QF under competitive contract and is now sourced to a private company who use all airlines/BFOD basis, car hire & accommodation on a user-driven computer program. If you want to go outside the BFOD or select higher accomm or car hire level, you can justify on the dropdown menus.

Oh, and this system hasn't fully functioned since day 1 and we're back with QF Govt travel in the meantime!!

 

[simongr]

This will be a nightmare of a tender to evaluate and the results will be unpleasant for many people. If they are truly looking at cost effectiveness across the whole of Govt then there will likely be winners and losers across Govt (so expect the headlines "Rudd govt's travel tender increases flight costs for XX Govt agency").

I wonder if MP's flights/benefits will be included as part of the tender or tender assessment process

 

[medhead]

To add to this from today's Australian:

Virgin hails move to tighten airfare policy | The Australian

NEW federal government travel tendering guidelines and moves to tighten airfare policy could cut travel costs by up to 25 per cent, Virgin Blue says.
Australia's No 2 airline is hoping to be a major beneficiary of the Rudd government's decision to scrap existing travel guidelines and introduce a new policy requiring bureaucrats to go for the lowest practical fare.
The new policy replaces individual departmental travel arrangements with three whole-of-government tenders aimed at improving co-ordination of the commonwealth's $500 million annual travel budget.

<snip>

"Typically, corporate accounts and state governments who have introduced a tighter best fare of the day policy with clearer guidelines ... achieve cost savings of around 25 per cent," he said. "And that's what we would expect for the federal government by doing it the right way."

Sounds like a new, tighter policy is being introduced on BFOD. This is not an all or nothing deal with one airline. In that case, if they do have a tighter, strictly enforced policy then I expect that Virgin will pick up business and Qantas should loss some business. Really the question of greater networks, etc, don't come into the equation. The airline used would be determined on a case by case basis for each trip, i imagine.

Also need to consider the fact that federal government most often book the fully flexible fares. At the high end on the few routes that I have checked the top DJ fare is significantly less then the QF fare. Even PE on DJ is cheaper then full flexible on QF for PER-ADL. iirc

 

[harvyk]

Also need to consider the fact that federal government most often book the fully flexible fares.

I see QF bringing in a "next to fully flexible" fare bucket or a special gov't rate to compete, I don't see them giving up a large chunk of their business without a fight.

Then again as someone who does prefer to fly QF there are ways of getting around the BFOD rules. (Unless the company policy is to never fly QF).

Either way, I wouldn't want to be in either airlines shoes right now, it could still kill off a large part of either airlines business in one swoop.

 

[equus]

Also need to consider the fact that federal government most often book the fully flexible fares. At the high end on the few routes that I have checked the top DJ fare is significantly less then the QF fare.

But what you or I can see as a flexible fare, and the corresponding price, and what is available to a corporate account may be quite different. I knew of (in the past) corporate arrangements where the fare booked "looked" like a red-e or super-saver on the systems out in the open, but the corporate arrangement was that is was flex, just needed to call the correct phone number.

Without any real knowledge, (other than all the "work arounds" to play the system to get a desired airline under a BFOD policy), I suspect that a properly run "tender" to get the right rebates and incentives for a preferred deal for one carrier, would work out just as well financially in the long run if the account is big enough to interest (or frighten if you want to look at it the other way) the airlines into coming to the party.

Of course, there may be system limitations as to flexibility to put together a package offering which may be driving one or other market player to espouse the benefits of BFOD (based on public take-it-or-leave-it rates), as it removes the need for any behind the scenes system work.

 

[medhead]

But what you or I can see as a flexible fare, and the corresponding price, and what is available to a corporate account may be quite different. I knew of (in the past) corporate arrangements where the fare booked "looked" like a red-e or super-saver on the systems out in the open, but the corporate arrangement was that is was flex, just needed to call the correct phone number.

It is difficult for me to comment on the federal travel arrangements. But at a state level the fare purchased is the same as what is available to the public. We are basically required to ring the government TA and use their service. The TA will buy the flex fares as a matter of policy. But we can nominate the lower level fares and they show up warts and all with the non-flex conditions. I can only assume that the government is getting some refund or something from the airline, similar to the rebate on AMEX business card. Bit tricky if this is the case because our budget pays the full fare. At least a centralised all of government travel arrangement would remove this recycling of money and probably provide some potential savings that way.

 

[coolumbla]

NSW government had a Qantas contract a few years ago where there were no FF points attached to fares (but i still got status credits!)

Currently i think we're on BFOD but i seem to end up on qantaslink a lot