CHIANGRAI TIMES – AIR Australia has been placed into voluntary administration, hundreds of passengers stranded and its flights grounded after it was unable to pay its bills. Administrators KordaMentha posted the news about the troubled airline in its website early today, saying that flights will be grounded.
It comes as the airline was denying it was broke as late as yesterday and on Wednesday had been continuing to sell tickets.
“It currently appears that there are no funds available to meet operational expenses so flights will be suspended immediately,” the statement read. “For clarity, it also appears highly unlikely there will be any flights in the short- to medium-term.”
Air Australia flies Airbus A320 and A330 aircraft domestically and to international destinations such as Bali, Phuket and Honolulu. Domestically, the airline serviced Port Hedland and Derby.
It was unclear this morning how many passengers were stranded but they were being told by the administrators they needed to make alternative arrangements and contact their credit card issuers.
Qantas CEO Alan Joyce said this morning Qantas and Jetstar would assist stranded passengers.
“They’re actually very full on Jetstar services but Jetstar is looking at adding supplementary services to help those passengers,” Mr Joyce told the Seven Network.
Mr Joyce said Qantas was also looking at adding supplementary services.
“If the (Air Australia) passengers come to a Qantas desk, a Jestar desk, show their ticket, we’ll give them a ticket for the same value they’ve paid with Air Australia,” he added.
“So they don’t have to pay anymore and they can try and recover that fare from their travel agencies or their credit card suppliers.”
Federal minister Bill Shorten told ABC radio this morning that the government would step in to assist Australians left high and dry.
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 has managed to get another flight back to Melbourne, but others were not so lucky.
“Three friends that I am travelling with now have to leave the airport to an internet cafe and they’re not flying out for another 48 hours. It’s costing a lot of money,” she said.
The administrators said people who paid by credit card could be entitled to refund but those who paid cash were unlikely to be entitled to a refund unless their insurance includes insolvency cover.
However, Australia’s biggest insurer CoverMore and a British underwriter last year withdrew insolvency cover because of worries about the airline’s financial situation.
People who booked through a travel agent should contact their agent, the administrators said.
KordaMentha said they would decided a strategy for the group during “the following days or weeks” and said people could refer to Air Australia’s website for updates.
They warned they were solely responsible for the group and businesses should not incur any costs or perform any work for the airline without a formal purchase order or consent form from them.
Just two days earlier, the airline denied it was in difficulty when posed questions by The Australian.
At that point, The Australian was told the company was under the pump from several of its creditors, including air navigation provider Airservices Australia and two major airports. Airservices is understood to have initiated court action over the money it is owed but a spokesman said the organisation did not comment on individual customers.
Melbourne Airport would not comment but Perth Airport chief executive Brad Geatches said his organisation was insisting that Air Australia pay outstanding charges. “We’re not aware where others might be on the subject but we will be quite insistent on receiving payment,” Mr Geatches said. “We are sensitive to these matters; I’ve got two Ozjet aircraft sitting on my airfield that are a constant reminder to our company of the risk associated with airlines failing.”
The Brisbane-based carrier flew domestic routes and to Bali, Honolulu and Phuket.
It was previously known as Strategic Airlines but relaunched in November 2011 as Air Australia with a view to cash in on under-serviced routes.
Chief executive Michael James said during the relaunch that he would not be attempting to compete with Qantas or Jetstar.
“I think it is re-educating Australia that you don’t have to go via Sydney anymore,” he told reporters at the time.
The announcement comes a day after Qantas announced it was shedding 500 jobs due to tough business conditions.
Steve Creedy -The Australian