Hundreds stranded as LCC Zoom folds up operations – eleventh carrier to go bust this year

With hundreds of people stranded on either side of the Atlantic yesterday after low-fare carrier Zoom grounded all its flights at short notice and entered bankruptcy related administration, industry regulators are calling upon the government to introduce a compulsory compensation scheme for airline passengers.

Zoom becomes the 11th airline to fold up this year.

The mass cancellation forced some travellers to pay thousands of pounds for alternative flights or cancel their holidays altogether.

UK civil aviation regulator, the Civil Aviation Authority (CAA), informed distraught passengers that only those who had booked flights as part of package deals would be guaranteed flights home at no further expense.

With the collapse affecting tens of thousands of passengers, who had paid up the price of their tickets, the Association of British Travel Agents (Abta) and the Air Transport Users Council (ATUC) are now asking for the introduction of a £1 levy on all air passengers leaving the UK towards a compensation fund.

Low fare carrier Zoom, folded up owing service providers millions of pounds in fuel costs, leasing charges, airport fees and the like. 

According to the company, about 80 per cent of its passengers with outstanding bookings would likely get refunds. An estimated 40,000 passengers had made bookings with Zoom over the coming year.

A company spokesman for Zoom said the company was in advanced negotiations for new investment and a refinancing package.

Initially the notion of a £1 levy had been mooted by the CAA three years ago, but was rejected by the government as it did not wish to force people to pay for insurance. The airlines too felt that it would add another unnecessary cost.

Another cruel twist to the story has been added for many passengers as they find out that even though they may have taken out travel insurance they may not be covered for "scheduled airline failure insurance".

It turns out that only two months ago, the insurance firm International Passenger Protection added Zoom to the list of firms it would not cover should the airline go bankrupt.