Canberra extends aid to support airlines for domestic flights
The extension of federal government aid will help keep Virgin Australia flying till it completes a sale. Picture: AFP
The federal government has extended its financial assistance to the aviation industry for up to six months in a move that will help keep Virgin Australia in the air until a sale is finalised.
Taxpayer-subsidised flights will continue to the end of September on key domestic routes, and until the end of the year for regional airlines.
Announcing the extension of aviation network support, Deputy Prime Minister Michael McCormack said the funding would not only prop up airlines but protect regional communities.
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“We don’t want airlines to be flying to various destinations and losing money so what we want to make sure is if we need to ferry around personal protective equipment, face masks and vital medical personnel then there’s the opportunity to do so,” Mr McCormack said.
“What we’re also doing is making sure the airlines have the capacity to do it, keeping jobs in those airlines and giving them hope coming out the back of COVID-19 that there will be a viable aviation industry.”
Since late March, close to $365m had been spent on subsidising domestic and regional flights and Mr McCormack’s office would not say how much had been budgeted for the extension.
Mr McCormack said the latest commitment would take the total funding for the aviation industry to more than $1.2bn across a range of measures designed to lessen the financial impact of crippling COVID-19 travel restrictions.
“I’ve been monitoring the aviation sector on almost an hourly basis, not a daily basis. It’s been something that’s occupied much of my waking hours over recent months and so far so good,” he said.
“Without this assistance, many of those aviation routes would not have seen services and many of the 250,000 people who work in aviation would’ve been out of work with the potential to never go back.”
Qantas and Virgin Australia welcomed the extended support for a minimum domestic network, saying it would allow them to continue to fly to destinations that would otherwise be unviable.
The support was also expected to help cash-strapped Virgin Australia remain in operation until the sale of the airline was finalised. The carrier went into administration on April 21 with debts of $6.8bn and administrators Deloitte have worked hard to find cash to keep Virgin Australia flying.
It’s understood they now have just over $100m, which is expected to see the airline’s bare bones operation through to the end of August.
US companies Bain and Cyrus Capital are vying to buy Virgin Australia for as much as $4bn with final bids due by June 22.
Mr McCormack, who has been under fire from unions for not bailing out Virgin, revealed he was following the administration closely.
“We have two firm bidders in Cyrus and Bain and I’m confident we can come out of this with two commercially viable airlines,” said Mr McCormack.
“I’m certainly confident that our regional airways will be as good as they can be coming out of the back of COVID-19.”
A Virgin Australia spokeswoman said the government’s support for minimal domestic network would allow the airline to increase its network reach and cities served.
“Pleasingly, the extension of the minimal network allows us to keep some team members working throughout the crisis and continue to keep Australia connected during this time,” she said.
“We remain in discussions with the government and hope to have a new contract finalised soon.”
Qantas announced a significant increase in domestic flying last week, coinciding with school holidays and a gradual easing of travel restrictions.
Services will increase from just over 100 return flights a week to more than 300 weekly return flights from June 22, with a further jump in capacity expected in July.
Despite the additional services, a Qantas spokeswoman said the subsidised flights would allow them to conduct interstate and regional services to areas where travel restrictions meant passenger numbers were limited.