Something to declare: Swe Fly heads south; Ryanair in the money

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Thousands of British travellers are likely to have lost cash following the collapse of a Scandinavian low-cost airline. Swe Fly, based near Stockholm in Sweden, has stopped flying. Three months ago, it launched flights from Luton and Leeds-Bradford to the Swedish airport of Skavsta, with connections to Lahore in Pakistan. More than 300 passengers who were waiting in Lahore for a flight have had to find alternative routes home.

A message on its website states: "The owners of Swe Fly have not been able to finance the operations", and warns that "we still do not know when or if flights will resume". The airline had just one jet, a Boeing 767. The statement says that "the staff of Swe Fly are ready to start operations at short notice", but aviation history suggests that this is a lost cause. Efforts to attract further investment appear to have failed.

Swe Fly began life 10 years ago as Svea Flyg. It has provided ad-hoc charter cover for UK airlines, but this summer moved into long-haul, low-cost aviation. It aimed at tapping into the strong demand from communities of Pakistani origin living in the Luton area and West Yorkshire. Return fares from the UK to Pakistan were as low as £351. Although loads were reported to be good, the airline simply ran out of cash.

The carrier took bookings mainly direct, either online or by telephone. When a customer deals direct with a scheduled airline, there is no consumer protection - although those who paid with credit cards may be able to claim a refund.

Repeated attempts to call the airline's reservations line and to contact the management have failed.

Ryanair, which once upon a time was under threat of closure, is now extremely cash-rich and profitable. The Irish airline's aggressive expansion plans have led it to open a new base at Nottingham airport (formerly known as East Midlands). Ryanair already serves Nottingham, but will for the first time be basing two aircraft at the airport - much to the irritation of Bmibaby and easyJet, which also use it as a low-cost hub.

The route network is distinctly different from its rivals, however. From next March, Ryanair will be serving the Polish cities of Lodz and Wroclaw, six airports spread across provincial France, plus Berlin. In addition, it will provide one UK domestic link, serving City of Derry airport - the gateway to County Donegal (see pages 20-21).

Bargain of the week: Spain

Our favourite sunshine destination is getting cheaper. All the no-frills airlines are putting in low fares to try to fill planes this winter. In addition, XL.com (0870 421 1830; www.xl.com) has a short-term seat sale for depatures up to the end of April next year that includes Christmas, Easter and half-terms.

XL.com flies from airports across the UK to Mediterranean Spain, the Canaries and beyond. Until 6pm next Tuesday, 20 September, the airline is offering "half-price" fares. Travelling in the next few weeks, you can find fares from Nottingham to Palma, Manchester to Malta or Gatwick to Lanzarote for under £100 return.

Next summer, the low-cost airline battle is set get even tougher, with Thomsonfly.com adding five aircraft to its fleet. The Boeing 737s will be based at Gatwick, Luton, Cardiff, Manchester and Newcastle, and will fly exclusively to Alicante, Malaga, Palma and Ibiza.