Negotiations became tough when the international airline appointed its new chief executive Paul Scurrah in March last year, mayor Col Murray told a probing press pack.

"It's probably not a huge surprise to the council," he said.

"Virgin had a change of senior management that set the whole process right back to the start again where there was a complete review of all operations.

"Virgin had never formally signed off on their agreement, while they had with the previous management regime agreed to terms and we got very close, with the change of management a year ago it all went on the back-burner."

The pilot-training school got the go-ahead from the Foreign Investment Review Board (FIRB) in October last year and was expected to be on the ground by Christmas.

There are mixed messages about what killed the deal, with Virgin Australia arguing the coronavirus pandemic and extreme bushfire season altered operating conditions.

The deal was shrouded in controversy last year when it was revealed a Chinese pilot-training project was launched exclusively to Chinese media in Sydney, two months before a deal was signed in Tamworth.

Cr Murray said he didn't believe the Chinese involvement had a significant effect on negotiations, and that the council had been aware of international interests from the start.

"Council was very well aware of who the parties were to Virgin and we'd always had a clear line of sight over that," he said.

"There's always going to be these challenges when these sorts of projects are put before FIRB and that took quite a while to resolve.

"Council will go back to the market now, we'll put out an expression of interest for interested parties."

The council will go back to the list of flight-training schools that originally declared an interest in the city.

Two major training partners, British Aerospace Engineering and CAE currently teach about 100 students at the Tamworth Regional Airport facility.

Virgin had not started paying rent to the council and Cr Murray maintains there has been no financial loss to the ratepayer.

"There wasn't any direct financial impact, we did put quite a lot of work into it as you do with these large commercial operations but that's par for the course," he said.

"This is normal business."

Virgin this morning announced a reduction in flight operations out of Australia but there's no sign that will impact services in Tamworth.

VIRGIN Australia's pilot training school deal with Tamworth Regional Council has toppled amid coronavirus pandemic concerns.

The controversial training ground designed primarily for Chinese nationals was set to train up to 500 students each year and address Australia's pilot shortage.

Virgin Australia chief operations officer Stuart Aggs said a lot had changed since the last update on the multi-million dollar project.

"The operating conditions within our industry have altered significantly as a result of the Australian bushfires and coronavirus," he said.

"In response, the Virgin Australia Group is currently reducing capacity and removing aircraft from our fleet, which means we do not forecast any demand for new pilot cadets for the foreseeable future.

"Therefore Virgin Australia and our preferred training partner, AIAC, will be withdrawing from negotiations with Tamworth Regional Council with respect to establishing a flight training school in Tamworth."

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The $30 million pilot-training school was given the tick of approval from the Foreign Investment Review Board and was expected to be on the ground in Tamworth around Christmas before the deal fell over.

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