29 August 2008

Passengers stranded as Zoom ceases operations

Budget transatlantic carrier Zoom Airlines left hundreds of passengers stranded when it ceased operations last night.

Having failed to attract new investors, the airlineââ¬â¢s owners announced that it had suspended operations with immediate effect.

All flights were cancelled and passengers are being advised to seek bookings with alternative airlines.

Passengers whose travel arrangements have been made as part of a holiday package originating in the UK and booked through a holiday company, may be able to make a claim under the CAAââ¬â¢s Air Travel Organiserââ¬â¢s Licence scheme and are being advised to consult the CAA ATOL website at www.atol.org.uk, a statement said.

Those who have future travel plans involving a Zoom flight for which reservations and payment have been made, are being advised to their credit or debit card company to apply for a refund.

Zoom has also publicised details of other airlines which operate the same or similar routes ââ¬Åâœin the hope that this may assist passengers in making alternative travel plansââ¬~.

Zoom blamed an ââ¬Åâœunprecedented rise in the price of aviation fuelââ¬~ which resulted in a $50 million increase in operating costs during the last year and the general economic downturn for its downfall.

This combination had made it ââ¬Åâœimpossible for operations to continueââ¬~.

The airline, founded by Scottish travel industry veterans Hugh and John Boyle, is the latest carrier to suffer from soaring fuel costs and a weakening economy.

Zoom Airlines comprises Zoom Airlines Inc, based in Canada, and Zoom Airlines Ltd, based at Gatwick. Both companies began administration proceedings yesterday (see previous TravelMole story).

The airline employs 450 staff in Canada and 260 in the UK and operated flights from six UK airports, Gatwick, Glasgow, Manchester, Cardiff, Belfast, Cardiff as well as Paris and Rome. It flew to eight destinations in Canada, New York, San Diego, Fort Lauderdale and Bermuda.

Hugh and John Boyle said: ââ¬ÅâœWe 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.

ââ¬ÅâœWe are desperately sorry for the inconvenience and disappointment that this will cause passengers and those who have booked flights.

ââ¬ÅâœWe 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.ââ¬~

They said that even as late yesterday they believed they had secured a new investment package to ensure future operations ââ¬Åâœbut the actions of creditors meant we could not continue flyingââ¬~.

ââ¬ÅâœHaving been unable to complete the investment package the directors of Zoom had no option but to instigate administration proceedings,ââ¬~ they said.

ââ¬ÅâœThe suspension of operations is a result of the exceptionally difficult trading conditions which have affected all airlines over the last 12 months. 

ââ¬ÅâœWe 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.

ââ¬ÅâœThe 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.

ââ¬ÅâœWe would like to thank the many thousands of passengers who chose to travel with Zoom during the last seven years and efforts of the airlineââ¬â¢s staff. We are extremely sorry for todayââ¬â¢s unavoidable actions.ââ¬~

The collapse of Zoom follows the failure of Asian low fares long haul airline Oasis Hong Kong and transatlantic business class carriers Silverjet, MAXjet and Eos.

*See TravelMole guest Comment.

by Phil Davies 

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• We told them so.
  
  

  Along with other industry bodies, and most recently, the Transport Select Committee, the GTMC has been telling the Government that there is a case for protection of pax buying tickets on scheduled airlines. Since deregulation, there are fewer flag carriers that are state owned, and we can see the signs that even they could fail. One GBP per pax collected on all tickets sold by carriers ex UK would have helped replenish the ATTF and provided the cover needed. It is possible that, after say 10 or 20 years in operation, it would then be large enough to stand alone, much as the Dutch scheme now does. Sadly, lobbying from interests on the supply side seems to have kept the option off the table of legislative priorities. Perhaps, this time?

  By Philip Carlisle, Friday, August 29, 2008
• a good idea but
  
  

  Sounds like a good idea, but this might bankrupt half the airline industry overnight. The existing arrangemant though can create problems - the more an airline expands the more cash flow it sucks in - and this cycle continues until you stop expanding or losses overtake your cash flow. Credit card companies and merchant providers however are not as free with their arrangements as they used to be, and many will ask for bonds or deferred payments from start up companies, or from existing companies perceived to be of a higher risk. We all feel sorry for the many clients who have lost their money with no hope of getting it back, and at an airline booking system that does not financially protect its customers.

  By Nick Cooper, Friday, August 29, 2008
• PAX & Credit Card Issuers Carrier Failure Victims
  
  

  Whilst many don't have much sympathy for credit card issuers, they and passengers are once again forced to finance a carrier's failure. Zoom's PAX were undoubtedly, in the main, people who could ill afford to buy full price tickets, let alone be out of pocket for several weeks whilst claims are filed, investigated and paid out. In Canada, not all provinces have protection plans for passengers buying tickets from with a given province and even less protection for a person living in one province and buying a ticket in another province. Ontario, Canada, has a compensation plan financed by a levy on travel agents but where is the justification in their having to pay? Credit card issuers, too, are faced with issuing credits in most jurisdictions and whilst they suffer short-term penalties, it is the credit card user that that will eventually be forced to pick up the costs through increased fees. In these financially stressed times, it is only proper that an escrow, or trust, system be put in place in which fares are held until a given flight actually departs. As I have said before, the costs of administration could be met from interest accruing on such monies. Of course carriers, together with IATA, will start whining but it is only because they are essentially running a shell game where ticket payments for future travel are used for financing today's operations.

  By Jon Hewson, Friday, August 29, 2008