Rex Airlines is ending its flights between Whyalla and Adelaide and accused a council of being "underhanded" and "devious" in relation to a security screening charge.
Rex announced that a $35-$40 per passenger security screening has rendered the route unviable.
The airline's general manager of network strategy Warrick Lodge said Whyalla City Council was being "devious" by trying to get the airlines to cover the costs of the charge.
"Imposing a passenger security screening charge of $35-$40 per departing passenger is a devious and underhanded attempt by Whyalla City Council to force Rex to subsidise the security screening costs of Qantas, whose services are legally required to be screened," he said.
But Whyalla Mayor Phil Stone said the airline was using the council as a scapegoat for its own decisions.
"We can't afford to absorb that cost and also, in fairness, we don't think one airline should pay double just because the other airline doesn't have to," he said.
Mr Lodge argues that Rex is not legally required to pay the fee.
Cr Stone said the council had opted to apply the charge to Rex, because otherwise Whyalla's last remaining airline, Qantas, would be paying $80 per passenger in security charges.
End of subsidy looms
The federal government was covering the cost of security screening but that will stop in June.
Mr Stone said the government should continue with the subsidy.
Billions of dollars have been invested into the renewables sector in the Whyalla area and Mr Stone says the loss of Rex Airlines undermines the government's plan to achieve net-zero emissions by 2050.
"Just recently Jim Chalmers mentioned Whyalla's importance to Australia's green future in his budget speech and now we've got this potential, now, of not having sufficient services," he said.
But Mr Lodge said all regional councils were facing the same decision and that was only Whyalla that had attempted to pass the cost onto Rex.
"This is something that is happening around multiple airports around the network Rex operates," he said.
"This decision the council had made in Whyalla is the only decision we have seen like this."
