The Indonesian transport ministry has suspended Nusantara Buana Air's air operator's certificate (AOC) after one of its aircraft crashed on 29 September.
The suspension follows an evaluation, which determined that the carrier's operations, maintenance, fuel usage and management failed to follow the country's regulations, said the ministry in a statement.
The suspension was given to "improve the carrier's operational and maintenance standards, and to prevent future incidents," the statement added.
Nusantara Buana Air violated "many rules" that led it to neglect safety standards, said the Director General of Civil Aviation, Herry Bakti.
Before the incident, the carrier won seven contracts to operate 20 services in nine provinces in the country.
The ministry said the airline does not have enough aircraft to operate the services and provide adequate maintenance.
Nusantara Buana Air's existing services will be offered to other carriers, such as Susi Air, Merpati Nusantara Airlines and Express Air, to operate, the ministry said.
The airline's Indonesian Aerospace (IAe) C-212-200 aircraft crashed into Indonesia's Sumatra island on 29 September while making its way from Medan to Kutacane, causing the death of all 18 passengers and crew.
Nusantara Buana Air has a fleet of nine aircraft comprising five C-212-200s and a C-212-100, two helicopters and a light aircraft.