THE Civil Aviation Safety Authority (CASA) says the grounding of the Northern Territory's biggest airline is not a result of an order by the regulator.
Hardy Aviation has confirmed it grounded all its flights on Saturday after CASA wrote to it on Friday about safety issues, which first emerged a week ago.
CASA spokesman Peter Gibson says "instrument rating" issues had been raised in relation to Hardy's chief pilot.
"We wrote to them yesterday about a range of issues and made a series of proposals," he told AAP.
Hardy had been given until Monday to respond to the letter, Mr Gibson said, but CASA had not moved to ground the airline.
"What happens next depends on what their response is," he said.
"If the whole airline is grounded, if that's the case, it must have been their (the airline's) decision."
However, Hardy's managing director, John Hardy, said on Saturday that CASA had grounded all its flights on Friday night over concerns with its pilot training and flight simulator.
Mr Hardy said hundreds of people would be affected by the grounding of the airline's 32 planes.
"How is the Northern Territory going to be serviced? I am really flabbergasted by their action, they're just diabolical," he told the ABC.
"Maybe they've got some concerns with us and we're working through them, most of it's administrative I think, and we'll work through it.
"But to shut the place down just while they flex their muscles with us is quite disappointing."
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