Virgin Airlines has backed-tracked on its plan to give Australian veterans a US-style public acknowledgement on their flights and priority when boarding, amid an outcry from veterans themselves.

Less than 24 hours after the announcement, Virgin released a statement saying it would now consult with veterans’ organisations over the plans and “be respectful” the process found public recognition was inappropriate.

The Virgin proposal was part of a campaign being driven by News Corp Australia – and backed by the prime minister, Scott Morrison. Using the hashtag #ThanksForServing, NewsCorp said it was fostering “a movement to acknowledge the service of veterans, past and present, and the sacrifice of their families”.

But it immediately drew fire from veterans and groups representing them as out of touch with Australian values.

Neil James, the head of the Australian Defence Association, called the move “tokenistic” and said it was a manifestation of American culture that was unlikely to translate well in Australia.

“The first problem is that there’s other forms of service to the community … like policemen and ambos, and so would you actually start a queue of such announcements? That’s a real worry,” he told ABC Radio Melbourne.

James said publicly thanking veterans might be damaging to their health in some cases.

“There’s a fine line between embarrassing them and thanking them and, in some cases, where they’re suffering a psychological illness, effusively thanking them in public might not necessarily help them,” he said.

Rodger Shanahan, a veteran who now works as a research fellow at the Lowy Institute, accused the government and organisations of using veterans for branding.

He said Australia was in danger of reaching “peak veteran’” as governments, media and business all tried to capitalise.

“It seems to be all about branding and veterans are the brand du jour,” he said. “I think they should dial it down a little.”

Even One Nation MP Pauline Hanson weighed in, saying she thought service people might be embarrassed by an acknowledgement. The independent senator Derryn Hinch also publicly opposed the proposal on Tuesday morning.

By Tuesday afternoon, Virgin Australia chief executive John Borghetti had issued a statement saying the company would pause to consult.

“We are very mindful of the response that our announcement about recognising people who have served in defence has had today, and it was a gesture genuinely done to pay respects to those who have served our country,” he said.

“Over the coming months, we will be working consultatively with community groups and our own team members who have served in defence to determine the best way forward.

“If this consultative process determines that public acknowledgement of their service through optional priority boarding is not appropriate, then we will certainly be respectful of that.”

His statement did not mention the inflight announcement plans, but a spokeswoman said they would also be part of the consultations.

Australia’s veterans affairs minister, Darren Chester, welcomed the Virgin announcement on Sunday, but acknowledged many veterans would sooner embrace discounted airfares.

“Australians, by nature, tend to keep their light under a bushel,” Chester said on the ABC’s Insiders program. “Some would be happy to get on the plane without anyone knowing they are there.”

Shanahan said the veterans’ community was a very broad church – it included people who had served just one day in the military through to people like himself who had served on multiple deployments overseas.

“Most of my cohort would rather not be defined by their military service,” he said. “They find this kind of acknowledgement disconcerting.”

Shanahan argued that people got carried away with the veteran identity while other groups, such as paramedics and aged care workers, who also served their communities went unrecognised.

Some of these groups routinely saw much more trauma than Australian veterans.

“There is a narrative that veterans are highly traumatised, have seen horrible things in hostile environments – and some have – but it’s a small proportion [of Australian veterans,” he said.

“There seems to be this disturbing desire to attach yourself to this term ‘veterans’. I would much prefer we recognised veterans in a laidback way, and we do that through Anzac Day.

“I don’t want to be thanked for my service. I gave them good service and they looked after me.”

The Morrison government has made several announcements aimed at veterans since the Invictus Games, as News Corp ramps up its campaign.

It has promised a UK-style veterans’ covenant, which includes a discount card and lapel pin so participating businesses can offer discounts or benefits to veterans.

“We acknowledge the important contribution veterans have made to keeping our country safe and the role they play in our community. Once the veterans have their cards and lapel pins, they will simply need to present them during the boarding process to be given priority boarding and be recognised on board,” Borghetti said when initially announcing Virgin’s initiative.

A spokesman for Qantas said the airline had the “utmost respect for current and former defence force personnel” and special announcements were made on Anzac Day and Remembrance Day.

“[But] we’re conscious that we carry a lot of exceptional people every day, including veterans, police, paramedics, nurses, firefighters and others, and so we find it difficult to single out a particular group as part of the boarding process [with the exception of passengers with special needs].”

On Thursday the government announced it would spend $500m to extend the Australian War Memorial to include exhibits acknowledging recent conflicts and missions, such as Iraq and Timor.

On Friday Morrision announced plans for a new veterans’ employment commitment to be rolled out to businesses that want to employ veterans.

“We want to translate Australia’s culture of respect for veterans into action. Simply put, hiring a veteran is good for business,” Morrison said.