When I blogged about Australia’s newest airline in January,  I was not convinced it was a viable proposition. So many start ups have tried in Australia and failed/disappeared (East-West, Compass I, Compass II, Impulse, for example). More recently, we have seen Tiger Airways Australia in trouble.

Australia is a tough aviation market in a tough aviation world. Already in 2012, three airlines have collapsed including Malev that I blogged about last week. Air Australia is the world’s fourth airline to be grounded this year.

On the morning of February 17, Air Australia, after less than three months of operations, ran out of cash. The airline could not even pay for the fuel to get a jet back to Australia from Phuket. Most if not all of their staff were stood down immediately. 4000 passengers were stranded in Bali, Phuket and Honolulu.

Their Twitter account was closed and Facebook page deactivated immediately. Phones stopped being answered and on the website appeared the following message: “On February 17 2012, the Director of the Air Australia group of companies appointed John Park and Mark Korda of KordaMentha as voluntary administrators,” Korda Mentha, of course, started as a result of the Ansett Australia collapse in 2001 Passengers waiting at airports including a plane-load of Australians who had checked in at Phuket airport were handed the attached information from KordaMentha.

Virgin Australia Airlines has announced it will assist passengers stranded in Bali  with a special fare of USD $199 one-way  to Brisbane, Sydney and Melbourne.  Qantas is developing a rescue plan. In the meantime, they have said that passengers with a ticket for travel on Air Australia today are to report to the Qantas Sales Desks at their departure airport.

Passengers who have paid with Credit Cards have found they may have protection from loss. Passengers may see the value of their tickets are credited back. Paying by bank transfer and cash do not seem to have the same protections. This is also a good time to check on the level of travel insurance. Will your travel insurance company cover your replacement flights. In this climate this may be coverage that you might need.

In the meantime, my thoughts are with the lovely crew members from Air Australia, I encountered on my first (and last) flight with them in January.

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