A return to Zoom and Bust

Major creditors owed money by airlines have a particularly powerful option that isn’t available to other businesses - they can simply stop a plane from taking off…

...and so it was the case for low-cost transatlantic airline Zoom, which went bust yesterday.. and it all happened in a matter of a few hours…....

First, a Zoom flight from Glasgow to Halifax and Ottawa (Canada) was grounded by BAA, the airports operator, for non-payment of European and British air traffic control fees, stranding 205 passengers.

Then a further 156 passengers at Glasgow were left without a flight when their plane was grounded in Canada for failure to pay aircraft leasing and airport fees.

By close of business, the two founders of Zoom, John and Hugh Boyle, had closed down Zoom’s website and suspended all operations. There is little prospect of Zoom ever flying again.

Back in June 2008, Michael O’Leary (CEO of Ryanair) predicted the demise of several low-cost operators and his grim forecast is beginning to come true. Even Ryanair faces the prospect of heavy losses in 2009. Which ones will be next?

It is worth reading the announcement on the Zoom website:

“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.”

What has happened to Zoom has happened to every other airline. From now on, only the strong will survive…