The Civil Aviation Authority in Australia says it grounded Tiger Airways fleet because it lost confidence in the airline's ability to manage its safety.
CASA has suspended Tiger Airways Australia's operations for a week, saying it believes permitting the airline to continue to fly poses a serious and imminent risk to air safety.
CASA spokesman Peter Gibson said it was a serious step and not one the regulator took lightly.
"In this case, the risk got to a stage where we believed there was a serious and immediate risk to safety, that's why they're on the ground," he told reporters in Canberra.
It's the first time CASA has grounded an entire airline and Mr Gibson said the regulator rarely put airlines on the ground, even smaller operators.
It grounded Ansett's 767 fleet of 10 aircraft in April 2001 and seven of the jets in December 2000.
Mr Gibson said the problem was the safety systems within Tiger itself and the action was the culmination of a number of events this year.
Asked about the risk of an accident had CASA not grounded the fleet, Mr Gibson told reporters: "Ultimately that's the risk, of course, that we're trying to avoid.
What we're saying is that the risk level got to such a stage that we could not allow them to continue on."
He added that the likelihood of an accident occurring was incredibly low.
CASA issued Tiger with a show-cause notice in March, centred on aircraft maintenance, pilot proficiency and the competency of the airline's overall safety management system.
CASA then imposed a number of conditions on Tiger's air operator's certificate, requiring actions to improve pilot proficiency and training as well as maintenance control.
Since then pilots have twice flown too low into Melbourne airports: an Airbus A320 on approach into Melbourne Airport on 7 June and another, also an A320, into Avalon airport late on Thursday night.
Tiger said it continues to cooperate fully with the regulator and safety underpins its operations at all times.
CASA has to decide in the next week whether it will go to the Federal Court to seek an extension of the grounding.