Wellington-based Vincent Aviation's Australian operation has been put in receivership in what the airline says is a bid to shore up its New Zealand business.
Vincent ran a fleet of nine leased aircraft and employed 80 people in Australia where it had set up a subsidiary largely to service the mining industry.
Chief executive Peter Vincent said the company had spent "millions of dollars" on the operation since 2001 but demand had dropped and attempts to find a buyer had failed.
"We've had three prospective purchasers fall through so in the end had no option but to put the Australian arm of the company into receivership. It wasn't forced on us by a bank or anything."
Vincent said some passengers who had paid in cash would become an unsecured creditor but that would be a "very small proportion" of passengers would be affected.