Federal Labor member for Lyons Brian Mitchell said without urgent action from the government the future for Virgin was grim.

Virgin announced a further seven-day trading halt on Thursday as it battles to survive.

Mr Mitchell said the best way the Government could help was by purchasing equity in the airline.

"I'm calling for a buy-in not a bail-out," Mr Mitchell said.

"The Government can buy in now and, when the sector recovers, sell down its stake and recover its investment.

"This is the simplest way to give Virgin the best chance of staying in the air, saving 16,000 jobs and keeping fares competitive."

Mr Mitchell said Tasmania's tourism industry relied on affordable fares and frequent flights and routes to the state.

"Without Virgin, there is no competitive pressure and fares in and out of Tasmania will go up and will stay up.

"Peter Gutwein and Richard Colbeck and all their Liberal colleagues must pick up the phone and push Scott Morrison to urgently extend a lifeline to Virgin Australia.

"We cannot leave this till later. The time to act is now."

Assistant Minister for Regional Tourism Senator Jonathon Duniam said the Government wanted to see Virgin continue.

"Our airlines provide an essential service, particularly in our regional areas and right here in Tasmania," Senator Duniam said.

"That's why we just announced an investment of up to a $165 million to ensure Virgin and Qantas can continue to operate the most critical domestic network services.

"Maintaining competition in our domestic aviation sector is crucial and conversations with Virgin are ongoing."

Mr Mitchell and Labor Senator Helen Polley urged Liberal MP and Senators to pressure the Prime Minister Scott Morrison to save Virgin Australia.

"Tasmania's regional economies have already suffered a series of blows as a result of Covid-19, and we cannot afford to be hit by losing Virgin Australia," Senator Polley said.