By Angela Dorizas

Federal politicians and public servants will no longer benefit from frequent flyer points when travelling by air, Finance Minister Lindsay Tanner has announced.

The Government has introduced new arrangements for the provision of domestic and international air services and travel management services to all agencies.

Mr Tanner said the new deal is expected to deliver more than $160 million to the 2010/11 Budget over the next four years.

“The Commonwealth Government spends more than $500 million a year on travel services,” Mr Tanner said.

“We are now using the Australian Government’s collective buying power to put in place a new travel deal for the Government and this is another step towards reducing waste and continuously improving government operations.”

The Government has signed new contracts with four domestic airlines, thirteen international airlines and five Travel Management Service providers to supply travel services to Australian Public Service (APS) agencies, politicians and their staff.

Jetstar, Regional Express (REX), Qantas and Virgin Blue have been awarded contracts for domestic travel; and Air New Zealand, Cathay Pacific, Emirates Airlines, Eithad Airways, Jetstar, Pacific Blue, Qantas, Qatar Airways, Singapore Airlines, Thai Airways, United Air Lines, Virgin Atlantic and Virgin Blue International (V Australia) have been appointed as international travel providers.

Mr Tanner said all domestic and international airlines contracted to the Commonwealth have agreed to discontinue frequent flyer and loyalty reward points for business related travel.

“This has been an issue of particular importance to me as the Government has previously been unable to extract the full value from such programs, with loyalty reward points acting as an incentive to travel,” Mr Tanner said.

He said further savings may be generated through “behavioural changes” within agencies, such as encouraging staff to use of online booking tools, seeking early booking discounts and selecting a cheaper fare class.

The new travel arrangements will take effect from July 1, 2010.

Mr Tanner said further changes to government travel arrangements could be expected, with a feasibility study into a whole of government approach to travel cards, accommodation and hire cars already underway.