Australian budget airline Bonza cancelled all flights Tuesday as it discussed the "ongoing viability" of the business just 15 months after launching.

Television images showed empty Bonza counters at Melbourne Airport as the cancellations stranded passengers with tickets on the domestic carrier, which boasts in its slogan: "Here for Allstralia".

"Bonza has temporarily suspended services due to be operated today, as discussions are currently underway regarding the ongoing viability of the business," chief executive Tim Jordan said in a statement provided to AFP.

"We apologise to our customers who are impacted by this and we're working as quickly as possible to determine a way forward that ensures there is ongoing competition in the Australian domestic aviation market."

Bonza made a splash when it launched in January 2023, promising a down-to-earth Aussie experience with onboard craft beer, snags (sausages) and a relaxed approach to crew uniforms.

Most of all, it promised tickets as cheap as $Aus49 ($US32) -- often servicing smaller regional airports.

Bonza was backed by US investment firm 777 Partners, which has been approached for comment.

Aviation analyst Neil Hansford of Strategic Aviation Solutions said the airline had been doomed from the start.

"The model was totally wrong. They were trying to fly on routes with no proven density, a leisure-only product," he said.

"It was the wrong aircraft at the wrong prices on the wrong routes."

Virgin Australia leapt on the announcement to offer a hand to deserted passengers.

"We will immediately support any passengers stranded mid-journey by offering complimentary seats on Virgin Australia-operated flights to the airport nearest to their final planned Bonza destination," it said in a statement.