Virgin is the latest in a considerable list of players - Ansett, Impulse, Compass - to have failed in the attempt to establish a viable long-term two-airline market.

It is almost 20 years since Ansett collapsed, pitching 16,500 people out of work and costing unsecured creditors $3 billion in unpaid accounts and workers $758 million in unpaid entitlements (though these were eventually honoured).

Like Virgin, Ansett was the second major airline of its day, at one point holding a 40 per cent share of the Australian market.

But after 66 years aloft it was brought down by a combination of high running costs, a bloated workforce, a disparate aircraft fleet, divisive board and management and heavy indebtedness.

Like its predecessor, Virgin, too, has been brought down largely by debt.

The airline flew into the COVID-19 storm already loaded with $5.3 billion in liabilities, and the coronavirus-driven travel clampdown sent it into a revenue tailspin from which it has not been able to recover.

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There are still hopes that Virgin can pull out of the death spiral, albeit having lost a lot of baggage and travelers on the way down.

There is talk of re-birth as a no-frills carrier with as few as 3000 staff - a far cry from the 10,000 direct and 6000 indirect employees it had just a few weeks ago.

If a slimmed-down and rebranded airline (retaining the Virgin tag would mean continuing to pay royalties to Richard Branson) does emerge, it may one day form the basis for a full-fledged competitor to Qantas.

The federal government is betting on it.

It has appointed former Macquarie Bank chief executive officer Nick Moore to work on its behalf with Deloittes administrators and teams from Treasury and Finance on what Treasurer Josh Frydenberg has described as a "market-led solution".

The treasurer said the government's goal was for "two commercially viable, major domestic airlines operating in Australia".

He, along with Virgin Australia chief executive officer Paul Scurrah, have talked up the prospects of a restructured and financially sound airline to emerge from the voluntary administration process.

That is likely to be of little comfort to the thousands of workers, both inside the company and among its subsidiaries and suppliers, who face joining more than a million others recently rendered jobless.

It begs the question of why the government, so ready to expend $130 billion to preserve up to six million jobs, could not see its way to extending a $1.4 billion line of credit to Virgin to save 16,000.

This is not the first time a major airline has gone under for want of government assistance.

A deal to rescue Ansett fell over at the eleventh hour when financial backers Lindsay Fox and Solomon Lew pulled out in late 2001, blaming a lack of support from the Howard government.

Little over a decade later, the Abbott government stood back when carmaker Holden warned it was reaching the end of the road of local production without additional assistance. It soon quit the country.

The government said that it does not 'pick winners' and has resisted Virgin's entreaties for a low interest loan. It remains to be seen whether its faith in the markets is well placed.