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dirty guru
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Thousands of passengers have been advised to find alternative flight arrangements after budget carrier Air Australia was put in the hands of administrators.
The Brisbane-based budget carrier was placed into voluntary administration on Friday, immediately grounding all flights.
It comes a day after national carrier Qantas announced an 83 per cent fall in profits and the loss of 500 jobs because of tough business conditions.
In a statement early on Friday, voluntary administrator Mark Korda of Korda Mentha said Air Australia would no longer accept bookings.
Passengers who bought tickets on a credit card or were covered for insolvency by their insurance were likely to be entitled to a refund.
Mr Korda said the administrators had been contacted early on Friday and appointed after the company was unable to pay for fuel.
"Overnight the company was unable to refuel its planes in Phuket, the directors appointed us at 1.30 this morning and the boys have been working throughout the night to deal with what's a very difficult situation," Mr Korda told Fairfax Radio in Melbourne.
Up to 4000 passengers were currently overseas with Air Australia return tickets, he said.
"We strongly recommend that people organise their return flights sooner rather than later," he said.
He said administrators would work through the weekend to try to find a "white knight" to save the airline.
Several hundred passengers were stranded after Air Australia's flight VC241 from Phuket to Melbourne was cancelled on Friday morning.
The airline was also due to fly a plane from Honolulu to Brisbane on Friday afternoon.
The airline consists of five Airbus A330-200 and A320-200 aircraft headquartered in Hendra, Brisbane.
Qantas CEO Alan Joyce said Qantas and Jetstar would try and fly Air Australia passengers home.
"They're actually very full on Jetstar services but Jetstar is looking at adding supplementary services to help those passengers," he told the Seven Network.
"If the (Air Australia) passengers come to a Qantas desk, a Jetstar desk, show their ticket, we'll give them a ticket for the same value they've paid with Air Australia," he added.
Stranded Air Australia passenger Sarah McGavin said passengers at Phuket were originally told very little about what was going on.
"We have been told that the flight was delayed twice and then nothing for several hours," she told the Nine Network.
"Then we had passengers go up and ask, the rumour mill went around that they had gone into administration."
She said that she had managed to get another flight back to Melbourne, but others were not so lucky.
Meanwhile, Workplace Relations Minister Bill Shorten denied the airline's demise had anything to do with the carbon tax.
Shadow Treasurer Joe Hockey accused the government of making it harder for airlines.
"The government is making it harder by, for example, imposing a carbon tax, which makes it more expensive to travel in Australia," he told the Seven Network.
Mr Shorten replied: "The fact that you can try and link the carbon tax to the stuff going on with Air Australia, I don't think reflects well on you."
Air Australia flew to Bali, Honolulu and Phuket internationally and Melbourne, Brisbane, Perth, Port Hedland and Derby domestically.
It was previously known as Strategic Airlines but relaunched in November 2011 as Air Australia to cash in on underserviced routes.
Chief executive Michael James said during the relaunch that he would not be attempting to compete with Qantas or Jetstar.
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