The Australian government’s reported position that it would allow another airline to enter the Australian domestic market if Virgin Australia failed is extremely short-sighted and could lead to a 20 per cent hike in airfares. It could take up to two years for another airline to get the approvals and set up an operation in Australia just when we need two vibrant airlines to help stimulate a battered economy in a few months’ time. Cheap fares to stimulate travel will be critical to help revive Australia’s fragile tourism industry. READ: Qatar Airways making flying safer than ever. READ: Airlines seek relief from massive refund liability. Any new airline needs CASA approvals and those can take years. Left in a monopoly position Qantas would increase fares to restore its balance sheet strength to the detriment of tourist operators around the country. An airfare rise of at least 20 per cent could be expected. In fact, when Qantas became the only operators on the Brisbane to Moranbah route airfares increased by 30 per cent. And when Virgin entered the Brisbane to Alice springs route airfares dropped 25 per cent. Airlines are being bailed out across the globe. The US has rescued its airlines to the tune of A$90 billion dollars to keep that vital air system operational and ready to bounce back. Australia needs to do the same but the cost would be more like A$5 billion if Qantas is included. It’s all very well for the federal government to say that airlines should stand on their own two feet but it is the federal and state governments that are closing international and state borders. Unprecedented actions call for unprecedented responses. It is also the federal government that allowed foreign-owned airlines to fly domestic services and to own major infrastructure. It must protect that infrastructure. Certainly, Virgin Australia is mostly foreign-owned but mainly by airlines which like all airlines are going through massive financial turbulence. And European based Ryanair – as some suggest – is not the answer as it offers a product well below that of Jetstar. Australia needs a second full-service airline to compete with Qantas and that is what corporate Australia will demand. It can be argued that Virgin Australia has had its difficulties. The cost of morphing into a full-service airline from Virgin Blue was more costly than anticipated and then there was the savage fare war with Qantas that battered both airlines and had unions and the media unfairly calling for Alan Joyce’s scalp. But the airline is a major contributor to the Australian economy carrying 25 million passengers annually, 30 per cent of Australia’s cargo, flies to 36 destinations including 20 regional communities. And it was Virgin that forced Qantas to introduce the low-cost Jetstar which has brought major benefits to travellers and the economy. And the ACCC recognizes the importance of Virgin Australia. Chairman Rod Sims has advocated for the importance of competitive structures persisting after the crisis is over: “In my view, Australia wants to emerge from this crisis with competitive structures as close as possible to those we had going in.” “Competition has a critical role to play in getting the economy running again post the COVID-19 crisis. It is important that the necessary short-term measures do not give rise to long term structural damage to competition or market concentration,” he said at a recent event. Virgin Australia contributes A$11 billion a year to the Australian economy and supports 4000 businesses. Whatever the loan cost to the federal government is – and it would be minimal – it is a fraction of what the cost would be to the Australian economy and tourism industry if Virgin Australia failed. It has been estimated that the benefit to the tourism industry of Virgin Australia competing with Qantas is A$1.12 billion a year. Virgin Australia must be supported.