Hundreds of passengers have been stranded in Bali after Indonesia reportedly said Tigerair did not have permission to operate some flights to Australia.
Flights between Bali and Australia will not run until at least Friday following the “new requirements”, the low-cost carrier said.
The decision was made after the Indonesian government imposed new conditions on Tigerair over its access to Denpasar airport.
However, Indonesia disputed Tigerair’s claim the rules were new, saying the airline only had permission for charter flights.
More than one million Australians visit Indonesia each year, with most heading to the holiday island of Bali.
About 700 passengers were affected by the cancellations on Wednesday, while a similar number will be grounded on Thursday, the no-frills subsidiary of Singapore Airlines said.
Tigerair said the current cancellations were made “to provide certainty and notice to our customers”, but added its five remaining flights on Friday were under review.
The budget carrier said Virgin Australia would operate two replacement flights from Bali on Thursday.
“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,” Tigerair Australia chief Rob Sharp told the BBC.
“If the Indonesian government does not wish to honour the current agreement, we are asking them to give us a grace period so that we can continue to fly while we work through the new requirements together.”
Indonesia said Tigerair had permission to operate “charter flights”, not “regularly scheduled conventional flights”.
“However, we found out that Tigerair had sold regularly scheduled conventional flight tickets from and to Bali,” Bambang Ervan, a transport ministry spokesman, said.
“They have broken AOC129 requirements. Yes we have given them a notification this week that they have broken the requirements. But this doesn’t mean that these are new requirements, otherwise all other airlines would have been impacted.”