(Image: AAP/Darren England)

The government appears sanguine about the possibility of Virgin collapsing and Qantas being restored to the role of monopolist it held after the collapse of Ansett. Or, at least, it wants the owners and creditors of Virgin to think it is while the company struggles to find a source of funding to stay afloat in the crisis.

Officially the government doesn't want to "pick winners" -- an argument that was conveniently forgotten when it (like previous governments) picked winners in defence manufacturing, steel manufacturing, health insurance, energy, housing and the media.

The experience of Qantas as a monopolist provided ample evidence of why preserving competition in domestic aviation on major routes is a critical policy goal.