All of Ansett Australia's flights were grounded in the early hours of Friday morning, following the federal government's decision not to provide funding to keep the airline operative.
Deputy Prime Minister and Transport Minister John Anderson says while the government provided Ansett's administrators with funding to ensure they completed their schedules on Thursday, it would cost too much to keep the service going.
"The administrators advised that it would cost up to $170 million just to keep the airline operating until Saturday night," Anderson says.
Ansett's administrator, Peter Hedge of PricewaterhouseCoopers, says he regrets having to suspend the operations of Ansett and its subsidiary companies, including Ansett International, Hazelton Airlines, Kendell Airlines (Aust) Pty Limited, Skywest Airlines and Aeropelican.
"The decision to ground the airline group was made with great difficulty early this morning, following meetings with numerous parties including representatives of all key unions.
"It is important to clarify that this action, to cease flight operations, is due to the lack of necessary cash or facilities to fund the operation.
"I must however stress that we remain in discussions with a number of interested parties regarding future options for Ansett Airlines and other parts of the group.
"I am acutely aware as is the Ansett management team, of the impact this regrettable action will have on the employees, customers, suppliers and many regional centres, cities and towns across Australia."
Hedge says he had no other option.
Stranded passengers are being given access to assistance packages by the government and Qantas.
Qantas has agreed to fly passengers to their return destination (ie, people needing to get home) for free for the next seven days. The government has established a support program to help stranded passengers not covered by the Qantas arrangement or travel insurance.
For details, call Qantas on 13 13 13, the government on 1800 052 002, or Virgin (who, along with Qantas, will offer special discount fares to passengers with unflown tickets) on 13 67 89.
An indication of things to come occurred yesterday (Thursday) afternoon with the first major casualty of the latest corporate collapse - Ansett's catering company Gate Gourmet appointed an administrator.
It is estimated Ansett owes the company $25 million.
Transport Workers' Union (TWU) federal president Hughie Williams says Gate Gourmet's employees have not had their entitlement (more than $20 million) guaranteed.
"This could be just the beginning, many companies could be effected, thousand of jobs could be lost," Williams says.
"Responsibility must now be accepted by the Howard government and Air New Zealand for the employees of all the companies who will be effected by the liquidation of Ansett."