About 447 flights have been cancelled around the world and passengers are scrambling to find alternative arrangements.
The Fozard family's Australian holiday was to be the "trip of a lifetime" and they booked with Qantas thinking it was a brand they could trust.
Exhausted couple Ian and Diane, sons Adam, 12, and Jamie, 6 and the British couple's elderly parents on Sunday found themselves among tens of thousands stranded by the shock grounding of the iconic "Flying Kangaroo".
The Fozards were due to fly back to their native Widnes after two "fantastic" weeks of whale-watching and sightseeing but are now holed up in a tiny studio apartment on what now looks to be an endless vacation.
"It was the holiday of a lifetime and I didn't want to end up stranded somewhere so we thought the best option was to book through a travel agent and book a reputable company," Diane Fozard, 38, told AFP, saying she was "shocked".
"Qantas is one of the biggest airlines and you think it will probably be alright, but it's not. Not at the moment anyway.
"It's more the not knowing, the fact that nobody knows what's going on. We've had to come to the airport to find out anything and even here they don't know much," she said.
The couple were among hundreds of confused and frantic passengers queuing for information at Sydney international airport's Qantas desk, with many expressing shock and anger that the airline had been grounded without warning.
Many pored over newspaper coverage of the grounding hoping for answers, while staff and passengers alike crowded around televisions and radios in the terminal following the twists in Qantas's bitter standoff with its workers.
Apologetic Qantas staff handed out letters explaining that flights had been axed "indefinitely", and urged passengers who need to travel urgently to book tickets through other airlines and to seek reimbursement from Qantas.
But the airline will not instantly reimburse cash-strapped travellers to allow them to make other arrangements, said JP Singh, who needed urgently to get to Melbourne to make a Singapore Airlines flight to New Delhi on Sunday.
Singh and his wife had been holidaying in Australia for a month and said they did not have the money to spend up front getting another ticket, and were struggling with the language barrier to understand what was going on.
Qantas staff told him they understood it was expensive to book new flights, but that the airline was unable to refund his Qantas ticket on the spot to allow him to buy a new one.
"Because of the sheer volume it's impossible for us to do all those refunds, we can't do that all in one day," Singh was told by a harried staff member.
California woman Jenny Wong came straight from an ocean cruise to the airport and had no idea Qantas had been grounded, describing it as "unprofessional" and a shock given the airline's good reputation.
Environmental engineer Jean-Luc Szymanski was due to return to Noumea for urgent business and now faced the prospect of waiting more than three days for a seat to open on another airline, or an epic voyage via Seoul or Tokyo.
Sympathising with the workers, he said: "The staff have tried to do what they can do, but the biggest problem comes from the headquarters."
US rock band Heart, who had supported Def Leppard in Newcastle on Saturday night, were among those stranded, with 18 crew scrambling to get on flights back to the United States.
Heart roadie Sue Wood, who managed to rebook with United Airlines, also backed the Qantas staff and lashed out at its management.
"I think everybody should be entitled to strike, to have the company take everything offline is bullshit. That's not okay," she said.
"They (staff) have been able to keep the planes going and they've been safe, there's been a few minor hiccups but to have the company shut down the entire airline, what a bunch of jerks."
