Budget airline Air Australia has gone into voluntary administration amid claims it was paying foreign flight attendants as little as $90 a day.

The airline's entire fleet was grounded early this morning after administrators discovered there was no money to meet basic operational expenses.

Around 4,000 passengers are believed to be either stranded overseas or potentially out of pocket.

Space to play or pause, M to mute, left and right arrows to seek, up and down arrows for volume. Listen Duration: 5 minutes 46 seconds 5 m Business editor Peter Ryan on the grounding Download 2.6 MB

Administrator Mark Korda of KordaMentha told AM that Air Australia was unable to purchase fuel at Phuket International Airport last night, prompting fears about the airline's solvency.

"The directors had a meeting at 1:30 this morning and appointed us as administrators due to the solvency of the company," Mr Korda said.

"The supplier of the fuel wouldn't grant any further credit to the company."

The Brisbane-based airline employs 300 staff and flies to Hawaii, Bali and Thailand, where many passengers have be told to make alternative arrangements.

Domestic routes have also been hit in Perth, Brisbane, Melbourne and Port Hedland.

The first flight to be grounded was the service from Brisbane to Melbourne this morning.

One of the company's flight attendants, who is from Thailand, has told ABC Local Radio she was being paid just $90 per day - including allowances.

Workplace Relations Minister Bill Shorten says he is very concerned by that.

"If they are doing domestic sectors in Australia that is not on and I will be contacting the Fair Work Ombudsman ... they should make some contact with my office and we'll get on top of that," he said.

Prime Minister Julia Gillard has echoed his comments, saying the Government has asked for the claims to be investigated.

"If there has been any mistreatment or any breaching of industrial standards then of course that's against the law, that's against our Fair Work Act," she said.

Passengers stranded

Mr Korda said he believes up to 4,000 passengers overseas had return flights with Air Australia booked over the next two to three weeks.

"Our focus at the moment is just dealing with the passengers overseas," he said.

"We have talked to Qantas, Virgin, Jetstar, but we are encouraging all people overseas to make alternative arrangements.

"We are very much getting the message out there [that] it is in your best interest to organise your own return travel given that Air Australia's operations have been suspended and in all likelihood would continue to be suspended.

"Hopefully we can find a white knight, if not the operations will stay suspended and then what we'll do is we'll follow up with everybody about how did this all happen?"

Sorry, this video has expired Stranded passenger Michael Ilyine talks to ABC News Breakfast

Qantas and Jetstar have already announced they will offer fares to stranded passengers at the same price as their Air Australia tickets, while Virgin will offer discounted tickets for flights home from Bali.

One of the stranded passengers, Michale Ilyine, spoke to ABC News Breakfast from his hotel in Phuket.

Mr Ilyine and his wife Tiffany had been due to fly home last night from their honeymoon, but after a delay of four hours were told their flight had been cancelled and were forced to scramble to find accommodation.

He says Air Australia provided no information about what was going on.

"When the flight was cancelled, it had been delayed for over four hours... everybody was shuffled back through immigration to collect their bags and find their accommodation and flights and taxis, there was absolutely nothing from Air Australia apart from a print-out," he said.

Mr Ilyine says while he is hopeful his travel insurance will cover some of the costs, the couple have been forced to pay up-front for replacement flights and accommodation while they wait to get on the next available flight.

"It depends what insurance will cover, but I'd say [we're] potentially out a few thousand depending on the insurer," he said.

"You have to book now and claim later, and there's a lot of other people at the end of their holidays who may not actually have any funds left to take that course of action."

A Department of Foreign Affairs and Trade (DFAT) spokesman says the Australian embassy in Bangkok is in touch with local authorities to help any Australians who are stranded in Thailand.

DFAT's 24-hour Consular Emergency Centre number is 1300 555 135 within Australia or +61 2 6261 3305 overseas.