Qantas has complicated the Morrison government's decision on whether to bail out Virgin Australia by insisting it should be eligible for a support package three times as large to "level the playing field" and avoid distorting the market.

The debt-laden and loss-making Virgin wrote to the government last week requesting a $1.4 billion loan to help it survive the coronavirus pandemic, which has devastated airlines globally. Qantas has told the government it does not want further financial support and is confident of seeing out the crisis on its own, according to a well-placed source with knowledge of discussions between the airline and government.

Qantas boss Alan Joyce has been lobbying against government support for Virgin, saying last week that government should not help companies that "have been badly managed for 10 years" and that helping Virgin and not Qantas would be "completely unfair" on his airline. Credit:Renee Nowytarger

However, the larger airline is insisting that if the government helps Virgin it wants to receive a similar package to avoid distorting the market and to "level the playing field". Qantas says the support should be proportional to the size of each business. Qantas’ revenue is three-times higher than Virgin’s, meaning it would want a $4.2 billion loan, the source said.

The demand complicates the government’s decision of whether or not to help Virgin because it significantly increases the amount it will have to deliver in an industry-wide package.