Australia Wants to Accrue Miles for all Government Travel. Gee, No Country Has Tried That Before…

US law used to prohibit federal employees from accumulating miles when traveling for work. The federal government found that this policy did not in fact save any money. And in December 2001 President Bush signed a law that allowed federal workers to accrue miles from their travel.

It’s very difficult for businesses and governments to make use of miles to offset the cost of business travel, especially under a regime where those miles are sitting in employee accounts.

  • When passengers don’t keep the miles — unless they’re seeking elite status — they have little incentive to even accrue miles by putting their frequent flyer account number in their reservation.

  • It’s cumbersome to sort through what miles in an account were earned for business travel, for personal travel, or for the myriad other things that one can earn miles for.

  • It’s difficult to use reward points for business travel. When you’re a small business, spending your own money, you’re willing to trade off flight convenience for savings. But when you’re on someone else’s dime there’s usually little incentive to do it. So you rarely find just the right times.

  • Frequent flyer tickets incur change fees (for most members) and require award inventory in order to make changes. Thus they’re less flexible, and most companies and governments aren’t accustomed to handling these fees in any case.

Even if the miles somehow sit in a company account, it’s difficult, as you need a travel arranger with some expertise in points to leverage them.

You’ll often see small companies make use of points, such as in a Membership Rewards account or Ultimate Rewards account earned via business spend. There’s a direct benefit to the bottom line and travelers incentivized to both save money and perhaps fly more comfortably in exchange for some flexibility.

And when you do see use of employee miles to offset business travel, while rare, it’s something that government’s are best-positioned to do because they can make it:

  1. Illegal for the passenger to accrue miles themselves
  2. Required that an airline pool miles in a government account rather than one for the individual

American Samoa did this with Hawaiian Airlines two years ago. (The Governor of American Samoa once threated to ‘ban’ Hawaiian Airlines – something he’s not empowered to do – due to their refusal to offer DigE Players on their Honolulu – Pago Pago service.)

The Australian government currently bans employees from accruing miles for official travel, so no one gets the miles (although employees do earn status credits). They’re considering changing that and demanding that miles go into a pooled government account which they think can save them AU$50 million per year by offsetting ticket costs.

The practical challenges of award travel notwithstanding, government fares currently exclude mileage-earning and future fares would include this marketing expense. There’s a reasonable chance that airlines will insist on higher negotiated fares in exchanged for this increased cost.

In the U.S., in contrast, some politicians turn their commutes into mileage runs.

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

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  1. Had a friend that worked for a US Fortune 500 company that allowed employees to fly business class for work related travel BUT the company had the rights for all the miles accrued on those business trips. He worked there for more than 5 years and never had one single mile in his account. Not sure how the process worked for the miles to go back to the company but that was their policy.

  2. The president didn’t sign any law. What you link to is the federal register which is where agencies, in this case GSA, publishes its rules.

  3. I did not collect miles fir official travel until President Bush signed that bill. I did not want there to be any chance of being accused of using “government miles” for personal travel.

  4. This seems to constantly come up. What I don’t understand is why companies (and the government) don’t just negotiate fares that do not accrue miles. Problem solved – no miles to track, immediate savings. In fact, I’m surprised my own company hasn’t done that (but I’m glad they haven’t!)

  5. Wow.

    Gary, some clarity might be helpful here – were Ozzy government miles pooled, wouldn’t that lead to less breakage and, on the margin, greater mileage costs for trips? And what sort of a mechanism would airlines use for pooling the miles in the first instance?

  6. If the Australian government really wanted to save on travel costs, they might want to change the rules that allow government employees business class on all trips more than 4 hours. Not only is that every international trip, it is all pretty much every flight to Perth from all major population centers.

  7. So Gary are you apologizing to Daniel as he called you out or you just ball busting to be righteous………man……..respect your readers once in a while and maybe they will come back and grow…………..otherwise…….well you are in charge of the bar aren’t you………….

  8. The Australian government should simply negotiate fares that don’t accrue miles but give a discount.

  9. @JustSaying I don’t get what you’re after?

    President Bush signed the 2002 Defense authorization act on December 28, 2011. That’s what caused the update in federal travel regulations.

  10. A slight factual in this post: the former USG policy did not prohibit collecting miles. You simply couldn’t use them (although you could take advantage of earning-related benefits such as elite status).

    People who were smart enough to collect miles anyway got to keep & use them for personal benefit when the policy changed.

  11. I am an employee of the Australian Government currently subjected to these conditions.

    @ Nathaniel. Your statement is void of fact. There is NO rule (or even guideline) permitting federal government employees to travel in Business on flight over four hours. As someone who regular travels on flights over this duration, I am never permitted to fly at the front. Different government departments may have their own policy but the overwhelming majority (and possibly all of them) do not have the policy you are referring to.

    @ Rambuster. This is the current practice. The Australian Government has allegedly negotiated lower fares that earn only status credits rather than points (our parlance for miles). However, any alleged saving is questionable.

    From my perspective I am very curious to know who actually owns the points: is it determined by whomever the airline wishes to give them to or the person who actually flies the miles?

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