The contract with the Australian airline company, SkyAirWorld, to operate the Sydney-Honiara route has been terminated.

Finance Minister Gordon Darcy Lilo made the announcement following "SkyAirWorld's 'defaulting' in terms of its contract".

"I would accept their decision to move ahead if we had not put forward that provision, the short term roll-over position," Government Communications quotes him as saying, referring to the ability of the Solomon Airlines and SkyAirWorld to get over their impasse that resulted in the grounding of the leased Ambraer aircraft.

Mr. Lilo has, instead, met with representatives from another Australian airline company, Pacific Blue, in what he termed as a "very encouraging" meeting.

He said a possible arrangement could be drawn up should a decision be made.

"The representative of Pacific Blue has expressed their interest to operate this (Brisbane-Honiara) route, and I hope that they will be given their licence by the relevant Australian authority to operate this route," he said.

He said some understanding of operating a partnership for the Honiara-Brisbane route has been established, which will include Solomon Islands Government, Virgin Blue and the private sector.

"This means some shares will be opened up to the private sector to invest in the airline," Mr Lilo said.

He said confirmation has been given in the meeting "... that as soon as they started operating the Brisbane-Honiara route ... the airfares will come down at least 25 percent".

But Mr Lilo said the operation of Skyworld in Solomon Islands to operate a twice-weekly flight to Honiara will depend on the consent of Australian authorities.

He said operation depends on how fast the Australian authorities grant Virgin Blue the licence.

The Minister said Virgin Blue has a strong marketing program that they can reach out to customers around the world to put Solomon Islands as a tourist destination.