Passengers stranded overseas due to the demise of low-cost Aussie airline Air Australia are paying upwards of $3500 to return home. 

The demand for heavily discounted seats on flights operated by Jetstar and Qantas has forced some desperate travellers to fork out thousands just to get on a flight back to Australia.

A news report on the Air Australia collapse by the TEN network in Australia.

Many travellers still remain stuck in Hawaii, Bali and the resort island of Phuket in Thailand while waiting to pursue refunds for their flights with the now defunct Air Australia.

It is estimated that 100,000 could be affected by the demise of the former Strategic Airlines, with many travel insurers refusing to cover passengers given their knowledge of the financial status of the airline.

Patience has been pushed to its limits, with angry travellers taking to social networking sites Facebook and Twitter.  Travel insurers and banks have been bearing the brunt of the furious passengers, with one online sales site facing the prospect of issuing more than $1 million worth of refunds.

Administrators for the collapsed airline have revealed that the merchant provider for the carrier is the ANZ Bank.  The bank is responsible for paying refunds to passengers who purchased by credit card.

Concerns over the financial state of the airline began in December, with two major insurance companies withdrawing cover for passengers flying with Air Australia over concerns raised about the carrier’s financial status.

It was no big secret throughout the industry, with a spokesman for Flight Centre revealing that travellers were forced to sign a waiver forfeiting their rights to insurance in the event that the airline could no longer fly.

”If the customer wanted to fly Air Australia after December 21, we couldn’t say, no, we’re not going to let you,” Flight Centre spokesman Haydn Long said.

Australia’s Civil Aviation Safety Authority (CASA) had already launched an investigation into the carrier’s operations, but could not ground the airline as there was no safety concerns.

Many passengers have been forced to wait out for days to find out when and how long it would take for to return home. Jetstar has returned some of the passengers, carrying out a special relief flight from the Thai island to Darwin.

Passengers described the scenes at Phuket Airport as chaotic, as travellers struggled to find seats home.

Victor Manusov of Melbounre said: ‘There were people crying saying they had no money to book new flights.”

”We heard stories that Qantas and Jetstar were going to help us but I was at the airport from 5.30am and there was no one there,” he said.

The airline’s Airbus A330-200 jet used for long-haul international flights is still sitting on the tarmac at Phuket, as the airline could not come up with the funds to pay for fuel for the return flight.