Government Subsidy Covering Domestic Flights for Virgin Australia and Qantas

By Josephine Gunther | April 16, 2020

The Australian government is currently discussing the potential for subsidies for domestic flights with airlines, including Virgin Australia and Qantas. To subsidise the routes would mean for the government to financially support the airlines and cover the costs involved.

Deputy Prime Minister Michael McCormack has stated that he spent the Easter weekend opening negotiations with both bosses at Qantas and Virgin Australia, following the decision for Virgin Australia to suspend all domestic flights apart from a single daily scheduled return route between Sydney and Melbourne.

Michael McCormack has stated that the government has opened negotiations with Qantas and Virgin Australia. Source: Lukas Coch, AAP

“We also need, of course, to transfer people around from capital city to capital city. So, we’ll be looking at that,” McCormack shared with the ABC. “We’ll be looking at what we can do in conjunction with the airlines, who are cooperative.”

The benefit of a government subsidy for airline domestic routes

The subsidisation of domestic flights would mean that regional centres would remain connected and returning Australians would be able to return to their home cities. The subsidies would also boost the Australian aviation sector, which is already receiving massive financial blows.

So far, airlines have been unwilling to run ghost routes due to the obvious lack of profit and potential COVID-19 exposure to the crew onboard from returning travellers.

With the added persuasion of government support, these routes may be closer to reality than imagined.

While still a risk, potential COVID-19 exposure for the crew onboard would be unlikely to be a concern as those on the flights would have already undergone 14 days of government-enforced quarantine prior to boarding the aircraft.

Returning Australian travellers will have already been in a 14-day quarantine. Source: Getty

Who will receive it first?

The first point of action would be to reopen closed airports and any necessary major routes between cities, supporting airlines with the ability to provide these routes the best, first.

The airlines most likely to receive the subsidies would be Virgin Australia and Qantas. Virgin Australia is likely to be first in for the subsidy because of the thousands of employees they have had to stand down, and Qantas would likely be next in line, with a vast fleet of Boeing 737 aircrafts ready to launch at any given moment.

Having already tried and failed to secure a $1.4 billion government loan, there are grim predications that Virgin Australia may not survive the massive blow made on the Australian aviation sector in wake of COVID-19. A government subsidy, therefore, would be a welcome development for all involved.

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