Virgin hails cheap fare rule

[Greg McDonald]

From NEWS.COM.AU:

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, reports The Australian.

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.

Finance Minister Lindsay Tanner said the government hoped to save millions of dollars a year by using its purchasing power to secure better travel deals.

Although details were sketchy, the government said the lowest practical fare policy would operate on "core principles" of necessity of travel, value for money and encouraging competition.

Virgin Blue has been complaining for years about the Qantas Group's stranglehold on government travel, in which the bigger airline is believed to have about 90 per cent of the market.

Virgin sales group general manager Mathias Friess said the airline strongly supported the move to whole-of-government tenders and was keen to "tick all the boxes" and submit tenders.

Tougher guidelines would make it harder for bureaucrats to argue they should travel with Qantas just because that was their preference.

He said Virgin was typically 15-20per cent cheaper than Qantas and he expected this would lead to more business.

Analysts and industry sources agreed Qantas could be the big loser from the new guidelines but there were questions about how the new policy would factor in huge discounts offered to governments and big corporate accounts.