CASA has canceled Barrier Aviation's Air Operator's Certificate (AOC), which means the airline is permanently grounded.
The Cairns-based charter airline and flying school was suspended on December 23 last year among claims the airline was flying aircraft with known defects.
According to CASA, Barrier had been "operating aircraft with serious and known defects, as well as directing pilots to fly these aircraft."
"Known defects were also not being recorded on aircraft maintenance documentation."
On February 22, the Federal Court made out an order prohibiting Barrier from operations. After an investigation, CASA was "not satisfied that Barrier Aviation would not operate aircraft with known defects if allowed to resume operations."
"CASA has determined Barrier Aviation had a poor safety culture and placed commercial imperatives before safety," CASA has stated.
"The inconvenience this action will cause for passengers and Barrier's employees is regrettable, however, CASA's primary and overriding priority is safety."
The AOC was canceled with effect from Wednesday, March 13, 2013.