Air Australia has failed in the worst possible way short of killing people. It has gone bust immediately stranding hundreds of people in Phuket and Honolulu, and placing some 4000 who are holding booked tickets in limbo, and being grubby with the truth.

Passengers at airports who had expected to board Air Australia flights are being told to go away and make their own alternative arrangements.

This is what Plane Talking was told on Wednesday, after hours of waiting for the airline to even do it the courtesy of replying to its inquiries.

Air Australia yesterday specifically and comprehensively denied that it had entered into administration.

After those denials it had a website which continued to offer to take money off consumers for services it knew it could not operate. It broke the law, just as Qantas broke the law when it stranded tens of thousands of customers in its contrived grounding. And no doubt like Qantas, it will be let off by the ACCC, which seems to have turned to water when it comes to prosecuting airlines for breaches of its rules, unless of course they are Asian, as Air Asia recently discovered.

This is what the Air Australia website looks like this morning:

Radio stations are receiving many calls from passengers stranded at Phuket for going on six hours now because the Thai authorities will not let its flight to Australia take off until it pays its bills.

The wording that is obscured on the web site image says that KordaMentha have been appointed administrators.

Quick advice to those ripped off with unused bookings. Call you bank or credit card issuer and cancel your purchase and apply for a refund to your account without delay.

KordaMentha says it appears there are no funds available to meet operational expenses and it is highly unlikely there will be any flights in the short to medium term.

It has, in so may words, told passengers to go and look after themselves.

It would be much more helpful if it also told passengers how to get their money back pronto.

KordaMentha also says that as well as standing down all 300 staff, Air Australia is up for sale.

He later said all staff would receive their entitlements, meaning that any temptation that might have existed in political ranks to have a surcharge similar to the Ansett levy after that carrier collapsed in 2001 has been headed off. What later became the KordaMentha insolvency practice administered the affairs of Ansett after its demise with distinction and great success for Ansett employees, recovering a very large proportion of the sums owed to them.

But, how do you sell something that is in debt up to its armpits and has no cash for fuel and unpaid airport bills?

Much of Air Australia’s international lift is flown by a leased jet, and the traffic rights are those that any Australian AOC holder can access on request.

Note carefully that KordaMentha has been reported as informally assisting Air Australia well in advance of being formally appointed as administrators.

This story has been updated at regular intervals but will soon be followed by an afternoon Air Australia story similar to the one now being read by Crikey Daily Mail subscribers.