The Australian passenger, named by authorities as Matt Christopher Lockley, was held after the plane landed on Indonesia's resort island of Bali.
The airport was closed for nearly two hours because of the incident.
Therefore forcing several flights to be diverted, director general for air transport Herry Bakti Gumay said.
The passenger acted aggressively and began pounding on the cockpit door before being handcuffed by the crew, Heru Sudjatmiko, airport manager for Virgin Australia, told the station.
The passenger was arrested for creating a disturbance, he said.
"There was no hijacking at all," he said. "It was only a miscommunication."
A hijack alert had been issued by the pilot about one hour before the plane landed, Indonesia air force spokesman Hadi Tjahjanto said.
The Boeing 737 was carrying 139 passengers and six crew members from Brisbane, Australia, to Bali. The island is a leading tourist destination for Australians.
"The aircraft landed safely and at no point was the safety of passengers in question," an airline spokeswoman said in Australia.