Government props up Virgin, Qantas to keep critical flights and freight alive

The Federal Government will underwrite $165 million for domestic flights run by Qantas (ASX: QAN) and Virgin Australia (ASX: VAH) during the Covid-19 pandemic.

The investment from the Government will allow both Qantas and Virgin to reinstate some domestic services, and is a big support for Virgin in particular which is currently suspended from the ASX as it considers its future.

Virgin's reinstated minimal domestic schedule will recommence tomorrow and run for a period of eight weeks until 7 June 2020.

The support of the Federal Government will also allow Virgin to reinstate some of its stood down staff including flight, cabin and ground crew.

The new domestic schedule is in addition to the international repatriation flights to Los Angeles and Hong Kong that Virgin Australia is operating at the request of the Australian Government.

For Qantas the investment will go toward increasing its domestic flight capacity from 105 flights per week to 164 to all capital cities and 36 regional destinations.

While the reinstatement of domestic air travel is necessary for those embarking on essential interstate travel, Qantas has highlighted how these flights will provide critical freight capacity.

"Much of the bellyspace on these flights will be used for mail and other urgent shipments, including medical equipment," says Qantas.

"Importantly these additional services will see more planes in the air and ensure communities stay connected and assist with the movement of critical freight around the country."

Qantas' new schedule will recommence from today and will be fully operational by Monday 20 April.

This new $165 million investment from the Federal Government is the third tranche of support for the aviation industry, following a $198 million regional airlines support package and a broader $715 million package for the entire industry.

"As Australians are asked to stay home unless absolutely necessary, we are ensuring secure and affordable access for passengers who need to travel, including our essential workers such as frontline medical personnel and defence personnel, as well as supporting the movement of essential freight such as critical medicine and personal protective equipment," says Deputy Prime Minister and Minister for Infrastructure, Transport and Regional Development Michael McCormack.

"We know that a strong domestic aviation network is critical to Australia's success and today's announcement demonstrates our commitment, yet again, to maintaining connectivity during this pandemic.

"This investment will also help Australians returning from overseas, who find themselves in a different city after 14 days of mandatory quarantine, complete their journey home safely."

Virgin Australia will operate 64 return services each week as per the following schedule:

Melbourne