Coronavirus: Virgin won’t get special treatment, says Michael McCormack

Deputy PM Michael McCormack has declared Virgin will not get any special treatment in the struggling aviation industry.

The government believes another airline would take Virgin’s place in the domestic market if it failed. Picture: Brendan Radke

Deputy Prime Minister Michael McCormack has declared Virgin Australia will not get any special treatment in the struggling avia­tion industry, amid a pushback by the Morrison government against a requested $1.4bn bailout to keep the airline afloat.

Mr McCormack, who is also Transport Minister, told The Australian there had been more than $1bn of support offered to the ­industry since the crisis began, and there would be no exceptional ­assistance for one company.

He said Virgin should consider raising capital from its existing shareholders, which include major foreign-owned entities Singapore Airlines and Etihad Airways.

“Whatever we do for Virgin we are going to have to do for other companies as well. We can’t just pick and select individuals and winners out of this,” Mr McCormack said on Thursday.

“Virgin is finding this very difficult, as are a number of other companies in the aviation sector. That is why we have put in place the JobKeeper payments.

“Virgin will also be able to benefit from the $298m package that we put down the other day: $198m for subsidising the 138 routes flown to and from regional centres.

“That is on top of the $715m (support package for the sector) that we announced on March 18. Of that, $159m was backdated to February 1 to pay for Airservices Australia fees, security fees and fuel excise.

“There has been a substantial amount of money put down.”

Senior government figures said a requested $1.4bn bailout of ­Virgin was unlikely, given the ­airline was struggling before the impact of the pandemic struck.

The government believes another airline would take Virgin’s place in the domestic market if it failed. The Australian revealed on Tuesday that Virgin had asked the Morrison government for a $1.4bn bailout to deal with the corona­virus crisis, prompting Qantas to ask for $4.2bn in assistance.

However, Nationals senator Matt Canavan said a bailout of Virgin should be considered, as long as it gave value to taxpayers.

“It can’t be a blank cheque but at the same time it would be a ­disaster if there was no competition in airline services, especially in regional areas,” he said.

“We were already facing massively expensive costs for flights, and that was doing great harm to business competitiveness in region­al areas, and I fear that if we were to move back to only a single airline that would be exacerbated.

“I don’t think we should put much stead in what Qantas says. They are obviously self-interested. We should be making this decision based on the national interest.

“If maintaining competition in flights can provide benefits, I am not dead set against it. But it needs to be a good deal.”

Nationals MP Barnaby Joyce has urged the Morrison government against supporting a bailout for Virgin, saying taxpayer funds were scarce and the airline should be allowed to fail.

“Virgin’s problems started long before coronavirus,” Mr Joyce said. “If it was the only problem around, I would say it was worth considering. But we are going to have to make hard decisions or we will run out of money.”