A regional carrier has blamed the carbon tax for its decision to axe two routes, but no less than Prime Minister Julia Gillard belied the claim.

Brindabella Airlines has cited the carbon tax, slated to be collected in July 1, as a major consideration in its decision to stop flying the Canberra-Albury and Brisbane-Armidale routes. The Canberra-based regional carrier said it would rather concentrate on its more lucrative charter business that caters to Australian mining companies.

"We need to be now seriously looking at where we can achieve the best utilization of our resources. Realistically you have to work the assets a little more harder now with the cost of being in this sector," The Sydney Morning Herald quoted Brindabella Chief Operating Officer Ian Vanderbeek.

Besides the carbon tax, which is expected to cost the air carrier $1,000 a day, Mr Vanderbeek said the other factors that affect the two routes to be axed are the cancellation of the en-route rebate scheme given to carriers that operate on some regional routes and the decline in passengers in the Canberra-Albury leg. He disclosed that the number of passengers in the Canberra-Albury route has gone down to an average of six from 14 travelers.

He said it would be difficult to pass on to air travelers the carbon tax because passengers would view it as a ticket price increase. In a letter to Liberal MP Susan Ley, Mr Vanderbeek admitted that the carbon tax is a major factor, but not a primary reason for the cancellation of the two routes.

Earlier this month, another regional carrier, REX, cancelled its Melbourne-Griffith trip because of weak passenger volume and the soon-to-be-collected carbon tax. But REX would take over Brindabella's former routes, according to Transport Minister Anthony Albanese.

However, Ms Gillard insisted that the carbon tax would only add a few dollars per flight and it would be offset by cash assistance to Australian families. She criticised Opposition leader Tony Abbott, who had seized the Brindebella cancellation of two routes to hit the carbon tax, for creating a fear campaign about the carbon tax. She insisted that the fear campaign which raised the spectre of higher power bills, closure of the coal industry and the wiping off the map of some Australian towns, would be debunked on July 1.

"When the sun sets on the 1st of July and none of these things have come to pass then this destructive negativity from the leader of the Opposition will be revealed to the Australian people for what it's always been him trying to run a political fear campaign and prepared to engage in any level of distortion to do so," Trading Room quoted Ms Gillard.

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