Deputy Prime Minister Michael McCormack has welcomed Queensland's $200 million commitment to ailing airline Virgin Australia and insists the Morrison government is also exploring all avenues to keep two airlines in the air.
But federal Labor said Queensland's approach stands in stark contrast to Prime Minister Scott Morrison's "piecemeal approach" to aviation which is putting tens of thousands of jobs at risk.
Queensland's Palaszczuk government confirmed it is providing $200 million to cash-strapped Virgin, with the airline having so far been unsuccessful in its request for a $1.4 billion loan from the federal government.
"Sustaining Australia's aviation industry is critical to protecting livelihoods and saving lives and the federal government is exploring all possible avenues to keep two airlines in the air, throughout this pandemic and on the other side of it," Mr McCormack told AAP on Saturday.
"I welcome states and territories exploring ways to assist their local aviation businesses and welcome the Queensland government's commitment to Virgin."
Mr McCormack, who is the federal transport minister, said the Morrison government has made a "significant investment" of an initial $165 million to keep Qantas and Virgin operating essential domestic network services, including the most crucial metropolitan and regional routes in Australia.
It brings the federal government's total support to the aviation industry to $1.28 billion, he said, with a heavy focus on Queensland routes.
Confirming Queensland's contribution, State Development Minister Cameron Dick says it is imperative Australia has two airlines to support tourism, jobs and regional investment.
"If we're going to get through this pandemic with two national airlines ... then all governments need to come together to ensure that is the case," he told reporters in Brisbane.
"Queensland can't do this on its own. This is a national airline weathering a national crisis and it needs a national response which is why we're asking the Australian government to take the lead on this."
Mr Dick said Queensland's support was conditional on debt restructuring, shareholders and bondholders doing their bit.
The airline's headquarters would also need to remain in Brisbane and regional flights would need to continue.
Labor's transport spokeswoman Catherine King said the Queensland government is demonstrating the clear national leadership needed to support Australia's aviation industry through the COVID-19 crisis.
"Scott Morrison must provide a lifeline to Virgin through extending or guaranteeing lines of credit and taking an equity stake," Ms King said in a statement.
"Such an intervention will give the government the temporary ability to support the airline through this crisis before the industry bounces back - and it will - when the government can recoup its investment."
Mr McCormack said the federal government will continue to monitor Virgin's situation.
"But the best solution for the airline would be a market solution," he said.
There has been speculation that various entities, including Chinese, are interested in keeping the airline afloat.
Government frontbencher Stuart Robert declined to expand on such talk.
"It is quite clear there's a bunch of commercial negotiations going on with Virgin ... they should be allowed to run their course," he told reporters on the Gold Coast.
Australian Associated Press