Virgin Australia is beefing up its skeleton schedule of domestic services following an extension of government funding. The airline, which is in voluntary administration, has kept a bare minimum of domestic services operating. Now, with services underwritten until the end of September, the struggling airline has some clear airspace and is stepping up operations.

Financial assistance keeps some flights operating

Virgin Australia's recent services have been entirely dependant on the millions of dollars flowing via the Australian Government's Domestic Aviation Network Support relief program. That program was due to end in mid-June. But the government has come to the party and extended funding for critical air services until September 30.

In response, Qantas resumed a swathe of domestic services last week. Now Virgin Australia is dusting off some of its parked planes and warming their engines.

“By early July, we will have gradually added approximately 30,000 seats across 320 flights per week to our schedule - more than doubling our capacity and providing more flexibility for guests," said Virgin Australia CCO in a media statement this week.

It's welcome news from Australia's second but embattled airline. Virgin Australia is constrained by cash shortages and uncertainty surrounding its sale and prospective relaunch. The airline risked being overtaken entirely by a resurgent Qantas.

Virgin Australia finally takes it up to Qantas

Now, Virgin Australia is matching the domestic capacity laid on by Qantas. Both operators flying more than 300 return services a week in July. It's a far cry from what the carriers usually operate, but it is also a substantial step up from the April capacity lows.

From early July, Virgin Australia will be stepping up capacity on the key trunk routes between Sydney, Melbourne, Brisbane, and Perth. There will be daily transcontinental services from across to Perth from the three key east coast cities. Down in the typically frantic southeastern golden triangle, multiple daily services are resuming.

Services to key regional airports such as Canberra and the Gold Coast are also restarting.

Border closure remain a barrier to more flights

Outside the southeastern states of New South Wales, Victoria, and the Australian Capital Territory, interstate travel remains a problem. The remaining states have kept their borders closed to non-residents. It is becoming an issue on several levels, not least for the airlines as it severely limits demand for their interstate flights.

But the airlines have the Australian Prime Minister on their side. Recalcitrant states dragging their heels on re-opening their borders are frustrating Scott Morrison.

"What I would like Queensland, Western Australia, South Australia, and Tasmania to do is to nominate the date that those borders will be open in July," the PM said.

Intrastate demand provides some relief

However, there is substantial demand for intrastate flights up and down the Queensland coast. These flights link the regional cities of Cairns, Townsville, Mackay, and Rocky with the capital Brisbane. Virgin Australia is resuming daily flights on these routes.

Over in the west, Virgin Australia is stepping up services to the resource towns of Newman, Karratha and Port Hedland. There will also be a weekly return service to Kununurra from Perth and a thrice-weekly return service to Broome.

Meanwhile, both Tasmania and the Northern Territory remain absent from the Virgin Australia schedule.

As interstate border restrictions are wound back and uncertainty surrounding Virgin Australia's new owners' ease, more flights should be added to the schedule. July's timetable is still a long way from the thousands of weekly flights Virgin Australia usually offers. But the extra flights just announced is a positive step in the right direction.