Hundreds stranded, thousands more out of pocket as airline fails

Hundreds of passengers stranded in airports from Gatwick to San Diego were trying to find a way home yesterday after the collapse of the transatlantic budget airline Zoom.

As many as 40,000 more – over a quarter of whom are based in the UK – were counting the cost of worthless tickets, after high oil costs and pressure from creditors forced the firm into administration.

Some booked on the cancelled flights faced an agonising decision over whether to forgo their summer getaway or shell out thousands more for tickets with other airlines.

Record fuel prices had added £25m to Zoom's operating costs. Efforts to secure an eleventh-hour rescue package failed.

One passenger due to leave from Heathrow on a flight to Halifax, Canada, who declined to give her full name, had been strapped in her seat on the plane when she discovered the company had folded. "We had boarded the flight and sat for an hour- and-a-half," she said. "We then had to disembark. The pilot was left to tell all the passengers there would no longer be a flight and the reasons why."

The news spread rapidly after the company's failure to pay the lease on a plane prevented a Zoom flight, bound for Calgary, taking off from Paris on Wednesday. Its 70 passengers were eventually taken to Vancouver by another airline.

Another Zoom plane due to leave Glasgow airport for Halifax, Canada, was then prevented from taking off on Thursday. The Civil Aviation Authority (CAA) had ordered the grounding because airport charges had not been paid. A third plane full of passengers was held at Cardiff airport. Zoom then halted all its activities at 7pm on Thursday, cancelling outstanding flights.

The owners of the airline, Scottish brothers John and Hugh Boyle, apologised to the 65,000 passengers affected and their 600 staff. They said they had "left no stone unturned" in their efforts to save the firm.

There was still hope on Thursday afternoon that a refinancing package could be found, but creditors lost confidence in the airline.

"We are desperately sorry for the inconvenience and disappointment that this will cause passengers and those who have booked flights," they said.

Passengers who booked using a credit card may be able to claim a refund from their card operator, but those who paid with a debit card or cheque are not covered for the cost of tickets.

Isobel and Michael Shannon, from Dumfriesshire, Scotland, were forced to cancel their two-week holiday to Nova Scotia after failing to find affordable flights. They had paid for accommodation and car hire and had paid for 15 days' car parking at Glasgow Airport. They were unsure if they were eligible for a refund. "The other airlines are quoting £2,500 and we just can't do it," said Mrs Shannon, 58. Mr Shannon, 61, added: "We appreciate that airlines go bust but what I object to is that BAA would have known about this and didn't let us know."

Some of the 15,000 who booked flights with Zoom through package-holiday operators may be able to find an alternative flight using the Air Travel Organiser's Licence (Atol) scheme, run by the CAA.

Airlines operating flights similar to those cancelled by Zoom have been listed on its website. Zoom said British Airways and Virgin Atlantic were offering special fares for its customers.

Zoom's demise follows the collapse of two other transatlantic operators. MAXjet folded at the end of 2007, with Eos closing in April. A third luxury airline, Silverjet, closed in May.

Analysts had been predicting that airlines would begin to struggle after the summer, but the closure of Zoom before the end of August has raised fears that financial pressures on the industry were claiming victims sooner than expected.

"The closure of Zoom does seem a little ahead of schedule, especially as oil prices have been falling recently," said Doug McVitie, an aviation analyst. "If anything, we may see prices come down as airlines compete for customers in order to make it through winter."

Some operators, including the budget airline Ryanair, have begun to cut the size of their fleets and have halted flights to some less profitable destinations.

Due to advance printing of the section, an advertisement for Zoom appears in today's Traveller