Deputy Prime Minister Michael McCormack has urged states to "do their bit too" and open their borders, as the federal government promised to keep underwriting hundreds of millions of dollars worth of flights until at least next year.
Mr McCormack will announce on Monday an extension to the domestic aviation network support and the regional airline network support programs as part of next week's budget.
Under the domestic aviation network support program, the government has subsidised the cost of keeping the 50 busiest air routes running, including flights from Canberra to other cities like Adelaide, Brisbane, Melbourne and Sydney. It would be extended until January 31 next year.
Through the regional airline network support program, the government has supported up to 270 weekly return services on 114 routes to 111 regional and remote locations across Australia. It will now continue until March 28, 2021.
More than $150 million has been spent on these programs to date, with the extension likely to cost hundreds of millions of dollar more.
Mr McCormack said the program extension would provide certainty for regional communities, includingtourism operators, while ensuring key medical supplies and staff could still move around.
But Mr McCormack said the states also needed to come to the party by relaxing border restrictions.
"We acknowledge the disruption caused by current border arrangements has made life difficult in the aviation industry, with cancelled flights, refunds and passenger frustration," Mr McCormack said.
"Uncertainty affects the ability of airlines and airports to plan for recovery and undermines consumer confidence, which amounts to a significant cost to industry and ultimately the Australian economy.
"The federal government is doing our bit by underwriting these flights to maintain minimum connectivity, now we need the states and territories to do their bit too as we again encourage the continued easing of border restrictions."
It followed the announcement of a $50 million regional tourism recovery fund for areas heavily reliant on international travellers.
Places like the Whitsundays, Gold Coast, tropical North Queensland, Tasmania, Kangaroo Island, Uluru, south-west Western Australia and the north coast of NSW will benefit.
These areas attracted 3.3 million international tourists last year alone, with more than 118,000 people employed in their tourism sectors.
Mr McCormack also unveiled an extra round of grants under the Building Better Regions Fund, with around $100 million of the $200 million available to go towards building tourism-related infrastructure in regional areas.
Australian Chamber Tourism executive chair John Hart said there had been a 96 per cent reduction in international tourism due to the coronavirus pandemic.
"'This fund will help address the great divide in tourism between the regions that have been able to capitalise on some intrastate visitation and those that have not," Mr Hart said.
Meanwhile ACT Labor senator Katy Gallagher struck out at the Western Australian government on Sunday for its continued closure to Canberrans.
"Here in the ACT, we do feel like we've been under the pump a little bit unfairly. The coronavirus pandemic has been managed really well here. We've never had community transmission in our jurisdiction and so I think it is difficult to justify why borders are closed to places like the ACT," Senator Gallagher said.