Zoom Airlines goes bust stranding passengers
[August 29th 2008]
Transatlantic low fares airline Zoom has gone into administration leaving thousands of passengers stranded at airports in the UK, Canada, the USA, France and Italy.
Founded in 2001 by Scottish millionaire brothers Hugh and John Boyle, Zoom flew from Gatwick, Glasgow, Manchester, Belfast and Cardiff airports in the UK. It also offered flights from Canada to Paris and Rome.
Zoom is yet another casualty of high oil prices and the economic downturn which has already seen other airlines including Silverjet, Eos, Maxjet and Oasis going bust.
"The suspension of operations is a result of the exceptionally difficult trading conditions which have affected all airlines over the last 12 months. We have worked hard over the last seven years to build up a successful business but have incurred losses in the current year due to the unprecedented increase in the price of aviation fuel and the economic climate. The increase in the price of oil has added around $50 million to our annual operating costs and we could not recover that from passengers who had already booked their flights, said the Boyle brothers.
Aviation fuel has doubled in price this year adding considerably to the overheads of airlines. Oil prices have come down from the record highs of almost $150 a barrel in July, but at around $120 a barrel now are still much higher than most airlines have budgeted for.
First indications that Zoom was in trouble came on Wednesday when one of its planes was detained in Calgary in Canada due to non-payment of fees. On Thursday, a flight from Glasgow to Halifax and Ottawa in Canada was refused permission to take-off because of non-payment of air traffic control fees. The airline officially suspended operations yesterday at 19.00 hours.
Hugh and John Boyle said: "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. Even late today we believed we had secured a new investment package to ensure future operations but the actions of creditors meant we could not continue flying. Having been unable to complete the investment package the directors of Zoom had no option but to instigate administration proceedings.
For passengers stranded at airports without a flight, Zoom has provided details of other airlines operating on the same routes. British Airways and Virgin Atlantic, which fly on some of the same routes as Zoom, are offering special fares to Zoom customers.
Passengers who booked their Zoom flight as part of a package holiday in the UK through an ATOL agent or who paid by credit card are likely to get a refund. Zoom is advising people to apply to their credit card company for more information. Passengers with travel insurance should also be able to get compensation for cancelled flights.
Zoom had its UK base at Gatwick airport and offered flights from there to seven cities in Canada including Toronto, Vancouver and Montreal. It also operated flights from Gatwick to New York, Fort Lauderdale in Florida, San Diego and Bermuda. In addition the airline operated flights from Glasgow airport to five destinations in Canada, and from Manchester, Belfast and Cardiff airports to Toronto and Vancouver.
More than 600 staff at Gatwick and Zooms Canadian base in Ottawa are set to lose their jobs unless a new investor can be found. "We deeply regret the fact that we have been forced to suspend all Zoom operations. It is a tragic day for our passengers and more than 600 staff. We are desperately sorry for the inconvenience and disappointment that this will cause passengers and those who have booked flights, the Boyle brothers said.
With no sign of an economic upturn in sight, and many experts predicting a full blown recession, it seems more airlines are likely to go the same way as the likes of Silverjet and Eos and go bust. Low cost airlines could be most at risk and only those with strong backing may survive. Even established airlines like BA are looking to form alliances in BAs case with American Airlines and Spanish airline Iberia in order to be able to compete more efficiently during these difficult times.
Written by: Nick Purdom
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