The Victorian government has pieced together a deal between Jetstar and Avalon Airport that will see the airline stay on until at least April 2015.
Jetstar had announced last week that it was considering dropping Avalon due to services being unprofitable.
Local and state media reported that the government is understood to be contributing the majority of funding for the $11 million rescue package, around $5.5 million, while Jetstar and Avalon airport owner Linfox will each contribute $2.75 million.
Jetstar confirmed it plans to continue operating domestic services to and from Avalon airport after reaching an in-principle agreement with the Victorian government and the airports operators.
Jetstar Group chief executive officer Jayne Hrdlicka said the airline had worked with the Victorian government and Avalon Airport to reach an agreement that will be finalised in the coming days to maintain Avalon services.
“Victoria is the home of Jetstar. Our head office is in Melbourne and we employ more than 1500 people throughout the State. Avalon has been a part of the Jetstar story since our beginning,” Hrdlicka said.
“We are committed to working with key stakeholders throughout 2014 to find ways to improve the performance of our services and support tourism to the region.
“The extension of services until April 2015 provides an opportunity for the community and its leaders to get behind Jetstar’s operations at Avalon Airport. We are hopeful that Jetstar working in partnership with the community and the Airport team will help Avalon find a sustainable future.”