The Prime Minister is hitting back at allegations he's not supporting New Zealand business by giving Jetstar a Government contract.

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 last week said it was 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.

The decision to choose Jetstar over New Zealand's national airline has infuriated New Zealand First leader Winston Peters.

"Why would he allow a cross-agency contract with Australia's owned and operated Jetstar, who have a horrible track record of flight cancellations and delays?"

Bill English said it's worth giving the airline a chance, particularly if it saves the taxpayer money.

"They're there along with a number of airlines, and if they provide the service that the government uses find acceptable, they'll do better and if they don't they won't."