Treasurer Josh Frydenberg confirmed the news on Sunday, which will likely force Qantas to push back its plan to restart long-haul flights on 31 October.
New Zealand will lift its temporary pause on trans-Tasman bubble flights to NSW on Sunday evening after the state continued to record no further community cases.
Chair Rod Sims said the deal would “undermine competition significantly” because it would make it too difficult for another airline to challenge on selected routes.
The union's request came after the flag carrier revealed it received incentives from states including payroll tax relief, marketing funding and direct incentives.
The business appeared to reiterate ultra-long-haul flights between New York, London and Australia was a matter of when, not if, stating it would launch once international travel recovers.
It comes after the business in September sparked a state bidding war when it said “anything that can move” is “on the table”, including its facilities in Mascot, Collingwood and Brisbane.