The Indonesian transport ministry has suspended Nusantara Buana Air's operating certificate after one of its regional turboprops crashed fatally during a domestic flight on 29 September.
The suspension follows an evaluation which determined that the carrier's operations, maintenance, fuel usage and management failed to follow the country's regulations, said the ministry.
Nusantara Buana Air violated "many rules" that led it to neglect safety standards, said Indonesian director general of civil aviation Herry Bakti.
The authority has imposed the suspension in order to "improve the carrier's operational and maintenance standards, and to prevent future incidents".
Before the accident, the carrier had secured seven contracts to operate 20 services across nine provinces in the country. But the ministry said the airline does not have enough aircraft to operate the services and provide adequate maintenance.
Nusantara Buana Air's services will be offered to other carriers, such as Susi Air, Merpati Nusantara Airlines and Express Air, to operate.
All 14 passengers and four crew members were killed after the twin-engined Indonesian Aerospace C-212-200 struck terrain while conducting a service to Kutacane from Medan in the northwest of Sumatra.
It came down in the vicinity of Bohorok, located east of Kutacane, and initial sightings of the wreckage had raised hopes of survivors.
Bakti had said that the C-212's wings as well as the forward and rear fuselage had appeared "still intact" after the aircraft disappeared during the 80km flight.
It had departed Medan's Polonia airport at 07:28 local time and had been expected to arrive at Kutacane around 35min later.
But the ministry said the aircraft - carrying 14 passengers and four crew - was lost in the vicinity of Bahorok, east of Kutacane. There is a ridge of high terrain in the region, rising to some 2,500-3,000ft (762-914m), and the cloud base at the time was around 1,700ft.
The aircraft (PK-TLF) was a 22-year-old airframe, manufactured in March 1989 under licence with 11,329h in 13,626 cycles.
Nusantara Buana Air had a fleet of nine comprising five C-212-200s, one C-212-100, two helicopters and a light aircraft. Like most Indonesian operators, it had been blacklisted by the European Commission as a result of a broad sanction on the country.
Source: Flight International