The airline's sudden closure came as a shock to staff and passengers who learned on Friday that it had gone into voluntary liquidation.

Fifteen full-time and eight casual employees are without jobs following the decision.

Braddon Greens MHA Paul O'Halloran said the island relied heavily on air transport to maintain economic, educational and family connections to the Tasmanian mainland.

``It is essential for King Island residents that there is competition in the airline market to keep downward pressure on ticket prices, and unfortunately this will leave just one operator servicing the island,'' he said.

``King Island business and tourism industries continue to suffer when costs to come and go from the island remain non-competitive with other domestic routes.

``And students studying away from home also rely on air transport to maintain regular contact with their family and friends.''

Mr O'Halloran said the airline's closure also raised questions about the state government's decision to loan Tasair $1.6 million in 2009-10.