Thousands in chaos as Zoom is grounded

By Jonathan Prynn for MailOnline
Updated: 06:49 EDT, 29 August 2008

Hundreds of passengers have been stranded and tens of thousands more left with worthless tickets after the collapse of the transatlantic budget airline Zoom.

Stranded: Passengers were left in limbo

The Gatwick-based carrier became the latest casualty of the spiralling cost of aviation fuel. It has applied for administration because it no longer has the money to pay airport landing charges.

All its flights were grounded last night, leaving up to 1,000 passengers on both sides of the Atlantic having to find alternative routes.

One plane has been unable to leave Calgary airport since Wednesday, while Glasgow airport was yesterday instructed by the Civil Aviation Authority to detain a Halifax-bound flight over the non-payment of charges. Another plane was held on the runway at Cardiff.

Passengers were initially told of a technical fault that had delayed departures before learning that the airline was unable to fly because of its financial difficulties. One stranded passenger said: "We had boarded the flight and sat for an hour and a half. We were then told we all had to disembark again. The pilot was left to tell all the passengers that there would no longer be a flight, and the reasons for this.î

Travellers will now have to book alternative flights and hope that they will be able to get a refund from their credit card companies. Passengers whose flights are part of a package holiday should be able to make a claim under the ATOL scheme that protects holidaymakers from tour operators going bust.

Zoom said BA and Virgin Atlantic were offering "specialî fares for passengers whose flights had been cancelled. Zoom's owners, Scottish brothers John and Hugh Boyle, issued an apology to travellers and its more than 600 staff in Canada and the UK after failing to secure a last ditch financial rescue package. The surge in the oil price, which touched almost $150 a barrel in July, is thought to have added around £25m a year to the airline's costs.

The Boyle brothers: "We are desperately sorry for the inconvenience and disappointment that this will cause passengers and those who have booked flights.î

The airline was set up in 2001 and operated flights from Gatwick, Glasgow, Manchester, Cardiff and Belfast, as well as Paris and Rome. It flew to eight destinations in Canada, as well as New York, San Diego, Fort Lauderdale and Bermuda.

A number of other carriers have gone into administration in recent months, including business class transatlantic firms Eos, Maxjet and Silverjet.

• What can Zoom customers do now? Will your airline be the next to fold?
Read our comprehensive advice...

More carriers will be brought down, writes Jonathan Prynn...

There is an old adage that since Orville and Wilbur Wright got off the ground just over a century ago the aviation industry as a whole has not made a single penny profit.

The current climate is as tough as any, with the possible exception of the months immediately after 9/11. While that was a relatively short-term shock, with passengers staying at home out of fear, the current downturn looks far more profoundly threatening.

The list of airlines that have gone under grows weekly with Zoom certain not to be the last.

Even Ryanair, one of the world's most profitable airlines, has said it could make a loss this year as its fuel bill grows from 36% to 50% of total costs.

At British Airways the top brass are locked in meetings about survival strategies for the perfect storm the industry is now flying through. So far it has been mainly relatively recentlyformed budget airlines that have gone under. Nobody thinks it will stop there. Greater environmental controls, strain on household budgets, security fears and a general loathing of airports all point towards a slowdown and even a fall in the number of people flying. That would have seemed unthinkable just a year ago.

The industry is expected to lose £3bn this year. Almost certainly a least one major international carrier will fail, with a rash of mergers.

There will be other victims. Many second home owners in mainland Europe will lose £1 flights to their nearest airports as carriers cut back. The case for expanding Heathrow and Stansted looks increasingly vulnerable.

Never has flying seemed a less attractive option. It is stressful enough as it is. Now throw in the increasing chance that your airline will go bust and leave you stranded while you are away. No wonder more people are letting the train take the strain.