The next four to eight weeks are "critical" for the airline sector, senior government officials have told a parliamentary inquiry.
"It's the volatility and never knowing," transport department deputy secretary Christine Dacey said on Thursday at a Senate hearing into the future of Australia's aviation sector post-COVID-19.
"Until we get an enduring domestic bubble I think this sector is in real strife."
Treasury boffins said challenges facing the economy remain significant, including uncertainty about the vaccine rollout and its impact- here and globally.
Long-haul flights are set to recover even more slowly than domestic demand. Treasury assumes inbound and outbound international travel will be hamstrung through 2021 and lag a wider Asia-Pacific recovery by six to 12 months.
Qantas told the hearing it was in daily contact with the government, as airlines eye the end of aviation support and no more JobKeeper payments from March 28.
The flagship carrier is lobbying for a skills package to support pilots and engineers to get back up to speed, along with the extension of all aviation support packages at least until international borders reopen.
Tourism operators are also vulnerable, unable to retain workers to cover the Easter holiday period without the cash handouts they are seeking from the treasurer to replace wage subsidies. Qantas is hoping for a Christmas boost as it bets on international travel from October.
Australia's more remote destinations are the hardest hit without international flights, Ms Dacey said.
Treasury first assistant secretary Matthew Brine said aviation would take "several years" to recover to pre-COVID levels, when aviation directly contributed $20 billion a year to the economy and employed 90,000.
Treasurer Josh Frydenberg is now looking at "targeted" support," Mr Brine said.
"The earlier a decision can be made, the better for confidence."
Fearing the Uber-isation of the industry, the inquiry initiated by Labor is also looking at the loss of thousands of cleaners, baggage and cargo handlers and caterers, and the airlines' increasing reliance on labour hire workers.
Rex Airlines is keen to see regional subsidies remain to make routes viable for smaller communities and itself, while unions have called for an "AviationKeeper" wage subsidy to replace JobKeeper.
Former union boss Senator Tony Sheldon is concerned Rex is winning grants at the expense of Virgin and much smaller operators whose regional and remote passengers have stopped flying during the pandemic.
Quizzed by Senator Sheldon, transport first assistant secretary Richard Wood said Rex was the largest recipient from a funding pool of $100 million to support cash flow, receiving $53.9 million, and Corporate Air - now trading as Link - was second with $6.3 million. But only $70 million has been distributed.
Treasury dismissed an OECD report that showed Australia ranked 18 out of 28 countries in support to aviation during the pandemic, saying comparisons with government-owned airlines are bogus.
Australia's whole of economy support is very large compared to other countries and airlines benefited in particular from JobKeeper - supporting 31,000 aviation workers across 300 entities as at February 28, Mr Brine said.
Qantas received $726 million in JobKeeper, but still posted a loss of more than $1 billion in the first half of the 2020/21 financial year.
The Morrison government this week extended the international travel ban by another three months to June 17, which restricts airlines, cruise ships and airport retailers as well as travellers.
Transport officials said they have started policy design for a five-year plan to be drawn up by June.
Australian Associated Press