The Chancellor Rishi Sunak has told airlines that they will only receive a bailout as “a last resort”.
In a letter to the airlines on Tuesday, Mr Sunak urged troubled airlines to seek extra funding from existing shareholders.
Several airline bosses have warned that they may collapse without government support as passenger numbers plummet as a result of the Coronavirus outbreak.
Ryanair, EasyJet, Virgin Atlantic have grounded almost their entire fleets, while British Airways’ owner IAG has grounded 75% of its flights.
The International Air Transport Association (IATA) said the aviation sector is facing an “apocalypse” as ticket sales fall by an expected £215 billion if travel bans remain in place for three months.
“Travel restrictions and evaporating demand mean that, aside from cargo, there is almost no passenger business,” IATA boss Alexandre de Juniac, said.
“There is a small and shrinking window for governments to provide a lifeline of financial support to prevent a liquidity crisis from shuttering the industry.”
In turn, the reduced number of flights is expected to have a dramatic impact on the future of airports across the country. Some have already cut hundreds of jobs.
Karen Dee, head of the Airport Operators Association (AOA), said: “While countries across Europe have recognised the vital role airports play and are stepping into the breach, the UK government’s decision to take a case-by-case approach with dozens of UK airports is simply not feasible to provide the support necessary in the coming days,” she said.
“Not only does the decision today leave airports struggling to provide critical services, it will hamper the UK recovery.”