Tiger Airways Australia will allow passengers who booked flights next month to cancel them without penalty, after coming under concerted pressure from the competition watchdog.

The budget airline, which has been grounded until August 1 due to safety concerns, faced the wrath of the Australian Competition and Consumer Commission (ACCC) last week for selling tickets without warning passengers that the flights they had booked might not eventuate if the ban was not lifted. After it was warned it faced multiple million-dollar fines, Tiger stopped selling tickets for domestic flights until the end of this month.

Tiger has now agreed to allow passengers who booked tickets for flights next month to cancel them without penalty, due to the uncertainty about it returning to the skies.