Tigerair has been granted permission to operate flights from Bali to Australia until Monday so it can bring holiday-makers home, but all flights to Bali have been cancelled.
Hundreds of passengers have been left stranded or had their holiday plans ruined as a stoush between Tigerair and the Indonesian government grounded the airline's flights to and from Bali.
The reason for the disagreement is unclear, with both Tigerair and Indonesia giving different reasons for the suspension.
Tigerair says the flight bans are because of new administrative requirements, but the Indonesian Embassy has emphasised it's due to the carrier's failure to meet existing requirements.
In a statement, the embassy said Tigerair had sold tickets in Indonesia - something all chartered airlines are not allowed to do.
"The suspension of the in-flight clearance for Tiger Airways is a commercial matter and will be imposed temporarily until Tiger Airways complies with regulations stipulated by the government of Indonesia," the statement said.
More than 1700 travellers have been affected so far, but the four-day reprieve will allow Tigerair to bring almost 2000 customers back to Australia.
All flights to Bali from Australia between 13 and 20 January have been cancelled.
Flights from Tuesday, January 17 onwards are under review, the airline said in a statement.
The airline was forced to cancel 10 flights between Denpasar and Melbourne, Perth and Adelaide on Wednesday and Thursday after it was advised on Tuesday afternoon by the Indonesian government.
Five hundred affected passengers in Bali have already boarded flights home.
Would-be travellers whose Bali holiday hopes have been dashed will get a full refund.
"Tigerair Australia has not been granted any further permissions at this stage," the airline said in a statement.
"We sincerely apologise to our customers for the inconvenience caused. Tigerair Australia continues to work constructively with the Indonesian Government in order to recommence normal operations to Bali."
Furious customers have blasted the airline on social media.
Melbourne mother Megal Deal said alternative airlines were either fully booked or charging ridiculous amounts and slammed the time it would take to receive refunds, labelling the two- to four-week wait "disgusting".
"Our long-awaited family holiday has been ruined ... Needless to say we will NEVER fly with your company again and will inform others not to do so either!!"
Tigerair Chief Executive Rob Sharp says the airline had temporary approval from Indonesian authorities to operate between Australia and Bali until March 25 under an arrangement that had been in place for eight months.
"This involves selling tickets in Australia between Australia and Bali," he said.
"Under the existing agreement, we are not able to sell tickets in Indonesia and we are fully compliant with this."
Griffith University aviation expert Professor Sidney Dekker said under charter flight arrangements, like the kind Tigerair has with Indonesia, the airline would only be allowed to sell tickets from Australia and must not sell one-way tickets from Indonesia.
Unless Tigerair has broken the rules, he suggested the stoush may be the result of a misunderstanding.
And unless Indonesia has raised the matter with Tigerair previously, its response has been harsh.
"Why the harsh response? There are other ways you can deal with it - warnings or various other diplomatic ways," he told AAP.