Thousands stranded as budget airline goes bust
Thousands of holidaymakers have been left stranded after budget airline Zoom went into administration.
The firm suspended all flights yesterday evening (28 August), with all aircraft grounded. It blames the crippling cost of crude oil, claiming this has added around $50 million to annual operating costs.
Despite efforts to save the airline with new investment deals, Zoom founders Hugh and John Boyle say pressure from creditors has forced them to call it a day.
In a statement on Zoom’s website, they say: "We are desperately sorry for the inconvenience and disappointment 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 re-financing package that would have kept our aircraft flying. 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.”
The airline was established around seven years ago and, until yesterday, employed around 600 members of staff. It flew mainly to Canada from Glasgow, Gatwick, Belfast, Cardiff and Manchester airports.
Zoom is the second airline to fall victim to high oil costs. In July, the Luton airport-based airline Silverjet went into administration leaving customers high and dry.
Advice to customers
It is estimated that around 20,000 people in the UK have booked flights with Zoom from now until the end of next year, with a similar number in Canada.
If you have already bought a Zoom flight and purchased your ticket with your credit card you should contact your card issuer as soon as possible to apply for a refund.
Section 75 of the Consumer Credit Act covers any goods costing between £100 and £30,000, which means that your credit card company is liable to cover any losses if your supplier can’t. This covers purchases made in the UK as well as those made overseas.
A similar scheme also exists with some Visa debit cards, with no minimum or maximum limit. However, claims must be made within 120 days of the date of the transaction.
If you are making a claim through your credit or debit card company, then be aware that it may take some time for your refund to come through.
If you have travel insurance, then don’t automatically assume this will cover you for your airline going bust. However, if booked your flight or a package holiday through a tour operator with an Air Travel Organisers Licence (ATOL), you will be covered and can either get a full refund, or it will pay for you to return home if you are already on holiday.
For more details, visit the ATOL website.
Or you can call British Airways on 0844 493 0 787 (in the UK) and 1-800-AIRWAYS (in North America), and Virgin on 1 800 821 5438.
Issued by a bank as part of a current account and, in a nutshell, serves as electronic cash. Unlike a credit or charge card, where you get an interest-free period before you have to settle the bill, the funds spent on a debit card are withdrawn immediately from your current account. Unless you’ve arranged an overdraft, if you don’t have the cash in the account, you can’t spend it.
Used by the holder to buy goods and services, credit cards also have a monthly or annual spending limit, which may be raised or lowered depending on the creditworthiness of the cardholder. But unlike charge cards, borrowers aren’t forced to pay the balance off in full every month and, as long as they make a stated minimum payment, can carry a balance from one month to the next, generating compound interest. As the issuing company is effectively giving you a short-term loan, most credit cards have variable and relatively high interest rates. Allowing the interest to compound for too long may result in dire financial straits.