It has been five years since the last budget carrier, Tigerair, flew from Melbourne to Canberra.

The airline, now owned by Virgin Australia, had been flying the route for roughly two-and-a-half years, carrying 140,000 passengers per year.

But the service ended in August 2011, after Tiger was grounded by the Civil Aviation Safety Authority, leaving Qantas and Virgin as the only two airlines flying to Melbourne.

The government has recently been doing behind-the-scenes work to renew a low-cost Melbourne link, a move that would significantly enhance Canberra's domestic interconnectedness.

Chief Minister Andrew Barr discussed the issue with Victorian Premier Daniel Andrews in recent talks, and says the operation of low cost carriers in and out of Canberra would "provide a significant boost" to the city.

"While the ACT has been successful in attracting international flights, there is still a need to improve our domestic offerings to give Canberrans and visitors more reasons to visit our city," Mr Barr said.

"Introducing new, low-cost carrier services to and from Canberra would provide a significant boost to our local economy through growth in tourism expenditure. New services would also create jobs and stimulate travel."

Meanwhile, the ACT government has also announced it will fund a new position to strengthen ties with overseas cities, days after it formally signed a sister city agreement with Wellington.

The creation of a commissioner for international engagement would aim to give a more coordinated approach to international engagement.

The commissioner would lead a new Office of International Engagement to be created within government, and has been announced ahead of a formal "international city strategy", which Mr Barr said would be released soon.

"This new position will play a key role in supporting and maintaining our engagement with like-minded international cities and regions – relationships that are important for both Canberra's economic diversification and our place in a modern and connected world," Mr Barr said.

"We have reached a stage where we must lift our international effort to another level to compete with other Australian jurisdictions and major cities."

The commissioner would support the existing sister city relationships with Wellington, Beijing, Timor Leste and Nara, as well as the memorandum of understanding with Shenzhen in China, and Singapore.

The government's current aviation strategy is focused on increasing the frequency of Singapore Airline's Capital Express route to Wellington and Singapore, with the ultimate aim of securing daily flights.

Discussions about flights directly to Auckland and China are also taking place.

The government says its strategy of encouraging interconnectedness with cities abroad has helped grow exports, the ACT's tertiary education sector, foreign investment and tourism.

The government has set itself a target to grow the value of the "visitor economy" to $2.5 billion by 2020.

Last year, the ACT experienced the largest number of domestic and international visitors in the territory's history.

Visitors were also staying longer and spending more compared to 2014.

Last month's ACT budget included a $7.3 million commitment to advertise Canberra interstate and abroad, particularly as a business and holiday destination across Australia and in Singapore, Malaysia and New Zealand.

Mr Barr won praise from the Tourism and Transport Forum for his work on the Singapore Airlines international flights and efforts to attract more Chinese visitors as part of Australia China Business Week.