Zoom flies no more

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10:40 GMT +00:00

Zoom flies no more
Posted by: Economist.com | LONDON
Categories: Budget airlines Oil prices
ZOOM, a Canadian budget airline based in Ottawa, collapsed spectacularly yesterday, stranding some passengers and throwing the travel plans of many others into chaos. The carrier blamed its bankruptcy on “the exceptionally difficult trading conditions which have affected all airlines over the last 12 months”.

A statement on the company's website continued: “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.”

Passengers who have bought Zoom tickets have been told to approach their credit-card companies for refunds. Other airlines have offered special deals to passengers stranded by the bankruptcy.

This won't be any comfort to those whose holidays have been ruined, but a bankruptcy like this is not the worst thing to happen to the airline industry. As the Canadian Press reports:

Airline analyst Jacques Kavafian said while fuel hit the seven-year-old carrier hard, its business plan relied exclusively on low fares that could easily be matched by larger competitors.
"Zoom was trying to get into a market that didn't exist really," the Research Capital analyst said in an interview.

The airline's demise should help Canadian rivals, especially charter operator Air Transat this coming winter, Kavafian said.

"One less player, less capacity, provided someone else doesn't jump in and fill the gap, it should be good for the remaining airlines, a small positive we think," he said.