The aviation regulator says it has lost confidence in Tiger Airways' ability to manage its safety after a series of events, culminating in the grounding of the airline's Australian flights.
All Tiger Airways Australia's domestic flights were today suspended for a week, until July 9.
It's the first time the Civil Aviation Safety Authority (CASA) has grounded an entire airline.
CASA said it took the action because it believed permitting the airline to continue to fly posed a serious and imminent risk to air safety.
CASA spokesman Peter Gibson said the action was not taken lightly and was the culmination of a number of events this year.
"All on top of each other, (they) add up to a position where the Civil Aviation Safety Authority has lost confidence in Tiger's ability to manage safety appropriately," Mr Gibson said.
"The last thing CASA wants to do is put airlines on the ground and inconvenience the travelling public but safety has to come first."
CASA had issued Tiger with a show cause notice in March, centred on aircraft maintenance, pilot proficiency and the competency of the airline's overall safety management system.
The authority then imposed a number of conditions on Tiger's air operator's certificate, requiring actions to improve pilot proficiency and training and checking processes as well as changes to fatigue management.
It also required improvements to maintenance control and ongoing airworthiness systems and ensuring appropriately qualified people fill management and operational positions.
Since then pilots have twice flown too low into Melbourne airports: an Airbus A320 on approach into Melbourne Airport on June 7 and another, also an A320, into Avalon airport late on Thursday night.
"It's not so much the mistakes in themselves, the individual mistakes of the pilots, it's the pattern you're seeing of safety issues arising over and over again within the airline," Mr Gibson said.
Tiger said it continues to cooperate fully with the industry regulator and safety underpins its operations at all times.
CASA has to decide in the next week whether it will go to the Federal Court to seek an extension of the grounding.
Mr Gibson said Tiger can put a case for getting back in the air to the regulator.
"This is a period for essentially natural justice for Tiger to be able to put their side to us and for us to consider that, and if not go to the court and let the court decide," Mr Gibson said.
Mr Gibson said CASA regretted that the action coincided with the start of school holidays in NSW and Victoria.
The suspension came into effect at 11pm yesterday and is effective for five working days, meaning at this stage it runs until Saturday, July 9.
It's the first time CASA has grounded an entire fleet. It grounded Ansett's 767 fleet of 10 aircraft in April 2001 and seven of the jets in December 2000.
Ansett was Australia's second largest airline when it was placed in voluntary administration the day after the September 11 terrorist attacks in the US in 2001.
In a statement on its website, Tiger said it was "doing all it can to minimise passenger disruption" for passengers.
The airline advised passengers with bookings not to travel to airports and said passengers would be offered a full refund or credit for deferred travel.
"The airline apologises for any inconvenience to its passengers," the statement said.
"Tiger Airways is committed to resolving the issue, assisting CASA and to resuming services as soon as possible."