Less than four months since stepping out of its Strategic shell and into Air Australia the carrier has announced the suspension of its services after confirming it was placed into administration early this morning.

Effective immediately, thousands of passengers have since been left scurrying to rebook flights with alternate airlines with at least two flights due to fly between Melbourne and Phuket as well as Honolulu suspended along with domestic services between Brisbane and Melbourne.

In total up to 40 flights have been confirmed as cancelled over the next week and according to the carrier, its grounding has resulted from a loss of money to refuel its aircraft and to “meet operational expenses”.

Administrators, KordaMentha spokesperson said it was “highly unlikely there will be any flights in the short to medium” and advised travellers who booked via credit card may ask for the money to be returned back into their account while those who paid cash are less likely to receive a refund.

"Unfortunately if you paid by cash, it is likely you will not be entitled to a refund unless you took out insurance and that insurance covers an event of insolvency," the administrator said.

KordaMentha added that there is hope for the recovery of the carrier overtime.

“We've had to suspend operations at the moment, that’s the first thing we’ve done and it’s possible we’ll be able to find a white knight to save the airline but it's early days yet," the spokesperson noted.

Meanwhile the Department of Foreign Affairs (DFAT) has issued a statement advising Air Australia passengers to contact their travel agents and insurance companies to organise alternative flights before contacting DFAT for more information.

The Department also recommended family and friends in Australia contact known travellers booked to fly with the carrier and notify them of the situation.