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Zoom Collapse

Thousands of passengers stranded as low-cost airline Zoom collapses  Aug 28, 2008

The carrier, which carried 500,000 passengers a year, became the latest victim of soaring fuel prices and the growing crisis in the aviation industry.

Its sudden demise left passengers having to find alternative arrangements to get home from airports in the USA, Canada and Bermuda.

British Airways and Virgin Atlantic are understood to be ready to fly passengers home with special one-way deals, following talks with Zoom.

The collapse also wrecked the holiday plans of thousands of people who were hoping to fly west across the Atlantic.

Meanwhile the position of those who have booked to fly in the future is more complex.

Some may be able to get their money back through their travel insurance and others could get a refund if they bought a ticket with a credit card.

The decision to ground all the airline's seven planes and cease trading came after more than 24 hours of frantic negotiations to save the airline.

Hugh and John Boyle, the Scottish entrepreneurs who founded the airline finally admitted defeat.

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

"We have done everything we can to support the airline and left no stone unturned to secure a re-financing package that would have kept our aircraft flying.

The first hint of tr ouble when creditors in Calgary seized the a Zoom aircraft, forcing the airline to make alternative arrangements to fly 69 passengers on to their final destination, Vancouver.

Then within 12 hours another aircraft, a Boeing 757, was impounded at Glasgow airport on the instructions of the Civil Aviation Authority, following complaints of unpaid air traffic control fees.

This left more than 300 passengers, who were due to fly to Canada, stranded at the airport while negotiations continued to save the airline.

Then an hour before the collapse of the airline they were sent home along with passengers on another Canada-bound flight.

During the day Zoom announced that it was seeking "creditor protection" during what it described as "acutely difficult" trading conditions in the industry.

But its talks with potential investors in the hope of raising money to enable it to stay in business proved fruitless.

As news of its financial difficulties spread, Zoom faced problems getting fuel to enable the rest of its seven-strong fleet to take off.

During the day Hugh Boyle said the company's trading position was a direct consequence of the horrendous increase in the price of aviation fuel and the economic climate.

"The rise in the price of fuel resulted in a $50 million increase in our operating costs during the last year alone and that coupled with the general economic downturn has led to difficulties which are being felt throughout the industry"

The airline, which at one point was offering £130 one-way fares between Gatwick and New York, became the latest casualty of soaring oil prices, which has plunged aviation into its worst crisis since the September 11 terrorist attacks.

It is understood Zoom, which became the first airline to attempt to offer budget fares to New York since the demise of Laker in the 1970s, has seen its fuel bill surge by £25 million.

This hit the company harder than many other carriers, because many of its seats are booked well in advance at heavily discounted prices, which in some cases barely cover the cost of fuel let alone operating costs.

Zoom was the brainchild of Hugh Boyle, a Scot who started the business in Canada seven years ago.

It moved into the British market, initially specializing in cheap flights to Canada.

Gradually it extended its route network offering services from provincial British airports and Paris to American destinations and Bermuda.

In June last Mr Boyle and his brother John entered the competitive New York market announcing flights costing as little as £130 one way – including taxes and charges.

At least two dozen carriers have collapsed over the past year including three specialist business-class carriers who operated services to New York: MaxJet, Silverjet and Eos.

Virgin Atlantic said that it was flying members of Zoom’s crew from New York to London as a “gesture of goodwill” to the carrier.

Thousands of passengers stranded as low-cost airline Zoom collapses
The low-cost airline offers services between Europe and North America /

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