The unruly passenger prompted the pilot to issue a hijacking alert. The crew managed to handcuff the passenger, who was arrested after the plane landed on Indonesia's resort island of Bali, officials said.
"There was no hijacking at all," Heru Sudjatmiko, airport manager for Virgin Australia, told Metro TV. "It was only a miscommunication."
Bali's airport was closed and other flights had to be diverted for nearly two hours.
The Boeing 737 was flying from Brisbane, Australia to Bali with 139 passengers and six crew members on board.
The Associated Press contributed to this report.