Zoom airline collapses and halts all flights
Zoom airline collapses and halts all flights
Hundreds of passengers were stranded at airports in the UK yesterday after Zoom, the low-cost transatlantic airline, suspended all operations after failing to pay its bills.
The Anglo-Canadian airline, which employed 600 people, said today that it would declare itself insolvent, blaming high fuel costs for its losses.
The fate of the airline was in jeopardy all day as planes were grounded and creditors attempted to seize assets.
A Zoom flight from Glasgow to Halifax and Ottawa was grounded by BAA, the airports operator, this morning for non-payment of European and British air traffic control fees, stranding 205 passengers.
A further 156 passengers at Glasgow were also left without a flight when their plane was grounded in Canada for failure to pay aircraft leasing and airport fees.
At Gatwick, two more Zoom flights were delayed and hundreds or passengers were forced to wait at the airport to hear if their flights would depart. After the Zoom website shut down, the airline said it was suspending all operations with immediate effect.
Zoom, which was founded by Scottish millionaires John and Hugh Boyle, said it regretted the inconvenience caused to passengers, many of whom may not be able to claim compensation for their cancelled flights.
John and Hugh Boyle said in a statement: "We deeply regret the fact that we have been forced to cease all Zoom operations. It is a tragic day for our passengers and more than 600 staff. We are desperately sorry for the inconvenience that this will cause passengers and those who have booked flights.
"We have done everything we can to support the airline and left no stone unturned to secure a refinancing package that would have kept our aircraft flying. Even as late as today we had secured a new investment package but the actions of creditors meant we could not continue flying.
"The collapse of Zoom is a result of matter beyond our control. Only last year Zoom Airlines made profit, but that turned into a loss in the last year due to the unprecedented increase in the price of aviation fuel and the economic climate.
"The price of oil resulted in our fuel bill jumping by nearly $50 million in one year and we could not recover that from passengers who had already booked their flights."
The airline had said today that it hoped to get its services back to normal. It sought bankruptcy protection to allow it to continue operating without having its assets seized by creditors.
However, it is thought that aviation regulators refused to allow the airline to continue operating without the immediate payment of debts to air traffic controllers. Suppliers were also refusing to refuel Zoom's aircraft unless they were paid in cash, which would have cost about £30,000 per flight.
More than two dozen airlines around the world have been forced into bankruptcy this year because of rising oil prices and the economic slowdown in North America and Europe.
Silverjet, which operated business-class services from Stansted to New York, shut down in June and Oasis, a low-cost operator to Hong Kong, closed in April.
Zoom, which was based in Ottawa, operated from Glasgow, Gatwick, Manchester, Cardiff and Belfast to cities such as Vancouver, Calgary and Halifax in Canada. It also provided charter services to Florida in the United States and the Caribbean.
Zoom passengers stranded in Gasgow and Gatwick were furious after being given no information on what was happening to the airline.
Jim McGrory, 62, from St Andrews, said he was travelling to Calgary from Glasgow and had been forced to spend £600 to fly with another airline. He added: “When I arrived there was a large queue at the Zoom office. Eventually we were told there was a delay because of a financial problem of some sort.
We have not been offered any compensation or help to find an alternative route. I think it’s been handled very badly.”
James Brown, a passenger from Glasgow, said: “Myself and my wife are booked for three days in Vancouver, then we’re travelling through the Rockies to Calgary. If there are any further problems with our flight, then that will effectively mean our holiday is ruined. The communication is extremely poor.”
Passengers who have travel insurance or booked their flights through an agent should be able to claim compensation for cancelled or delayed flights.
However, passengers who booked direct on Zoom’s website may only be able to reclaim their money from credit card insurance.
Virgin Atlantic and British Airways have said they will offer Zoom passengers discounted fares on their services.
Aviation regulators are considering imposing a levy on all air passengers to create an emergency fund for those caught in this sort of situation. Airlines are not keen on this idea because they do not want to increase fares further.
Aviation analysts expect more airlines to go out of business in the coming months on the back of falling demand for flights and high fuel costs. Some estimates predict that as many as 50 carriers in Europe could collapse, leaving only those with strong balance sheets, such as British Airways and Lufthansa.
Aer Lingus, the Irish airline, said that it expected to lose up to €30 million (£24 million) this year and could lose substantially more next year without severe cost cutting. It gave warning that, without reducing its costs, its business may not continue to be viable.
http://business.timesonline.co.uk/to...fset=12&page=2
Reply With Quote
Social Networking Bookmarks