Spanish airline LTE International has suspended all its flights because it can no longer cover costs.
LTE operates flights to a host of Spanish holiday resorts including Malaga and Tenerife from across the UK.
An LTE statement said the airline was doing “everything to minimise the impact of this suspension of services” on its customers.
“After 20 years operating with maximum dedication to our clients, it just was not possible to avoid this situation, given world events lately,” the firm said on its website.
The Spanish Civil Aviation Authority is due to decide whether to suspend LTE’s operating licence.
Problems in the aviation industry due to high oil prices coupled with a fall in ticket sales have already brought down a series of small airlines over the past year.
The most serious collapse came in September, with the demise of XL Airways and its parent firm, the UK’s third-largest tour operator.