Indonesian authorities say they grounded Tigerair Australia because the budget airline does not use its own aircraft or pilots to fly between Australia and Bali, which breaches the rules of its licence.
Tigerair on Wednesday cancelled flights between Bali and Perth, Adelaide and Melbourne and the routes will be grounded indefinitely unless it can meet what it called “new administrative requirements” demanded by the Indonesian government.
Indonesian Transport Ministry spokesman Bambang Ervan told Fairfax Media that Tigerair was suspended because it was flying under a chartered plane licence but selling tickets as if it were a scheduled airline.
“Chartered flights cannot sell tickets,” he said.
Mr Bambang said a evaluation was conducted between December and early January after Tigerair requested flight clearance.
He said Tigerair could resume flying only once it determined whether it wanted a chartered or scheduled licence.
“If they choose a scheduled licence they have to get AOC 129 [air operator certificate],” Mr Bambang said. “AOC 129 is a procedure applied worldwide for scheduled flights.”
Tigerair has been flying to Bali since March 2016, but the airline – which is entirely owned by Virgin Australia – has not yet been granted the necessary licence to fly its own aircraft on the routes.
The budget airline has instead operated aircraft owned by Virgin and flown by Virgin pilots but painted with Tigerair livery and manned by Tigerair cabin crew.
Tigerair chief executive Rob Sharp said the airline had been given approval by the Director General Air Communication and Director Air Transport to use this charter arrangement until March 25.
“We are not proposing any changes to the agreement – we are operating under the same approval we have been for the last eight months,” Mr Sharp said.
“We are working constructively with the Indonesian government to commence flying to Bali again as soon as possible and to work through the new requirements they have given us this week.”
Mr Sharp said if the the Indonesian government decided not to honour the current agreement, it should give Tigerair a grace period to continue to fly while working through the “new requirements”.
It is understood oversight of Tigerair’s agreement to fly under a chartered licence recently passed to a different department within the Indonesian government, sparking the grounding.
Peter Harbison, executive chairman of aviation market intelligence group CAPA-Centre for Aviation, said it appeared Tigerair was a victim of Indonesia’s bureaucracy.
“You could argue that this is an airline that has a different [aircraft operator certificate] from Virgin and should therefore be treated independently, and therefore it can only fly charters,” he said.
“But to suddenly switch from accepting it to giving in no days’ notice to terminate is ludicrous. It’s totally unreasonable.”
By late Thursday, Virgin had flown 500 Tigerair passengers back to Australia on its own or other airlines’ planes, while another 350 remained stranded.
Qantas shares have risen 5 per cent since Tigerair was grounded.