Tiger Airways Australia's grounding follows its failure to convince the civil aviation regulator that it can conduct safe operations despite having been ordered earlier this year to improve pilot training and proficiency.
Australia's Civil Aviation Safety Authority grounded the airline on 2 July, stating that it believes the carrier "poses a serious and imminent risk to air safety".
The decision follows a show-cause notice issued to the low-cost airline in March which ordered it to tighten pilot training and fatigue management, improve maintenance control and reinforce its operational management structure.
These conditions were imposed on the carrier's air operator's certificate, and CASA says the airline has been under close examination since. But further events - notably two incidents in June in which Tiger Airbus A320s descended below minimum altitude on approach - have spurred the regulator to take dramatic action.
"In the circumstances CASA no longer has confidence in the ability of Tiger Airways Australia to satisfactorily address the safety issues that have been identified," it says.
The suspension, initially for five working days, effectively grounds Tiger until 9 July but CASA could apply to the Australian federal court to extend the grounding, if necessary, in order to carry out a thorough investigation.
Tiger Airways Australia says it has "mitigated immediate passenger disruption to the best of our ability" and is focusing on co-operating with CASA to "achieve a satisfactory outcome to this investigation at the earliest opportunity".
It adds that it has taken internal steps to address specific issues and CASA's wider concerns, stating: "We wish to reassure the Australian public that safety has, and will, underpin our operations at all times."
The airline is a spin-off from Singapore's Tiger Airways but services to Singapore are unaffected.
"We are committed to resolving these [issues] quickly and resuming our [domestic Australian] services as soon as possible," says Tiger.
Virgin Australia has stepped in to offer special fares to affected Tiger passengers on certain routes.