The Morrison government appears to have ruled out any further support for the aviation sector, having already piled millions of dollars into an industry that has suffered at the hands of coronavirus.
Deputy Prime Minister Michael McCormack insists he wants all of Australia's airlines to come through the other side of the pandemic.
"We realise it's going to be very, very tough for them. COVID-19 is having a devastating effect on regional, domestic and international travel and we want to make sure that our aviation industry is protected," he told parliament on Wednesday.
"That's why the federal government is providing and has provided more than a billion dollars of support for aviation."
But Labor is urging the Morrison government to extend an additional financial lifeline to Virgin Australia, otherwise it will put hundreds of jobs at risk and damage the two major airline structure that has successfully supported the economy.
Virgin Australia, which is foreign owned, is seeking a $1.4 billion line of credit and a "statement of confidence" similar to what the government would grant the major banks.
Labor's transport spokeswoman Catherine King told parliament, during a debate on the $130 billion JobKeeper package, the government must extend a lifeline to Virgin.
"If it does not, it is taking an active decision to see one of our major airlines fail in this country, and that will have significant consequences for hundreds of workers in the aviation sector and across our economy to come," she said.
Virgin Australia boss Paul Scurrah warned the nation cannot afford to emerge from the pandemic with just a monopoly airline.
"We are not looking for a bailout," he said in an interview with The Australian.
"We are asking the government for a bridging facility and working with them to make sure there is confidence that people can look forward with certainty that there will be a competitive and robust airline industry coming out of the crisis."
Virgin Australia is 90 per cent owned by Etihad, Singapore Airlines, two Chinese conglomerates and Richard Branson's Virgin group.
Prime Minister Scott Morrison has previously cast doubt on the prospect of a lifeline.
Ms King welcomed the cash injection the government has already offered to around a dozen regional airlines and said it indicates the government is prepared to cushion businesses through this crisis.
"Labor believes the government must be flexible and be open to financially supporting our large aviation companies, including extending or guaranteeing lines of credit or taking an equity stake in the industry," she said.
"Such interventions will ensure that when the industry bounces back - and it will - government can recoup on its investment.
Mr Scurrah said the future of carrier's 9500 staff was dependent on the government's support.
"The federal government wants to emerge from this crisis with two airlines," he said.
"And without us, it is not going to have one. We all know what would happen if there was a monopoly."
Australian Associated Press