Coup for Jetstar in Government's $220m travel spend deal as Air NZ yet to be signed up

A Jetstar Airbus A320 landing at Wellington Airport. Photo / Mark Mitchell

Jetstar has been chosen as a long-term supplier of lucrative government travel for the first time while Air New Zealand is yet to sign any deal.

The Qantas-owned airline will provide travel for public servants and government agencies on domestic routes, following a hotly-contested bidding round for the 10-year deal.

Last year All-of-Government air travel was worth $223 million, split between a number of airlines.

The Ministry of Business Innovation and Employment says it is still in discussions with other air travel suppliers, including Air New Zealand, with a view to including them on the panel.

Air New Zealand is 52 per cent owned by the government and been a big provider of air travel previously.

Other international airlines including Emirates, Etihad, LATAM, Lufthansa, Singapore Airlines, United Airlines and Virgin Airlines are on the list.

A small domestic carrier, Sounds Air, has also been signed up as an official supplier.

A spokeswoman for Air New Zealand, when asked for comment on the deal, said:

"The Government works with a panel of suppliers for its domestic and international air travel. Air New Zealand is in positive discussions about our ongoing role as a supplier."

When asked what would happen in areas Jetstar didn't serve, the ministry said it was possible to buy flights from non-panel suppliers if the panel suppliers could not meet the needs of that journey, such as not flying to a specific destination.

"Negotiations with Air New Zealand are ongoing, and we are unable to specify when they might end. We will announce the outcome when negotiations conclude."

Jetstar Group chief executive, Jayne Hrdlicka, said the airline was now firmly established in New Zealand and able to provide the government with a choice for domestic jet and regional travel to a range of destinations

Jetstar is part of the Qantas group and Qantas is again a supplier for transtasman and long haul services.

Hrdlicka said the choice of which airline to fly on main trunk and some regional routes would save taxpayers money.

She said that with short flight times within New Zealand, a low fares domestic airline option made economic sense for government travel.

Jetstar began domestic services in New Zealand nearly eight years ago and carries more than two million passengers every year.

The airline's regional destination had added 600,000 seats to its operation.

Qantas has been a supplier to the government for flying across the Tasman and long haul routes since 2012.

The carrier operates more than 230 weekly services between Australia and four destinations in New Zealand, with onward connections from Australia across more than 600 weekly services to 27 international destinations.