Thousands of passengers hit as cash crisis airline stalls

ZOOM, the Scottish-owned transatlantic budget airline, has suspended all flights and is applying to go into administration.

Thousands of passengers have been told to rebook with other carriers, and to contact credit or debit card firms about refunds.

Earlier, two of the airline's jets were held at Glasgow and Cardiff airports after the airline faced demands of "millions" of pounds in late bills.

The airline, which has seven Boeing 757s and 767s, blamed a combination of the "horrendous" price of jet fuel – which had added £27.3 million to annual fuel bills – and the economic slowdown.

Flights from Glasgow to Canada were halted on the instruction of the Civil Aviation Authority (CAA) concerning the non-payment of charges to the European air traffic control company Eurocontrol and the UK's air traffic controller, Nats.

News of the airline's bankruptcy left hundreds of passengers stranded. They should have left Glasgow on a Zoom Airlines flight to the Canadian cities of Halifax and Ottawa at about 10:55am yesterday.

But BAA Glasgow detained the Boeing 757 on instructions from the CAA.

Passengers who were read a customer announcement yesterday evening about the company's decision said they were angry at the lack of communication from Zoom following their arrival early in the morning.

Carolyn Kristjansson, 45, from Greater Vancouver, was due to travel with her husband and son on the 12:40pm flight to Vancouver after visiting a relative in Scotland.

She said: "We arrived at 9am, more than three hours before our flight, and waited for 45 minutes then we were told that the flight had been delayed due to technical problems.

"We were told to check back and some people left the airport but we have been waiting here as we had nowhere to go and had limited currency. We've just found out what's happened and my husband is trying to phone the credit card company now to see where we stand. It seems to have caught everybody by surprise."

Jim McGrory, 62, from St Andrews, was forced to pay £600 to fly with a different airline: "It's been handled very badly. If I handled my own business like that, I wouldn't have one."

Tommy Furay, 65, from Kirkintilloch, outside Glasgow, who was due to fly to Toronto with Zoom at 11am today to attend his niece's funeral, said: "They must have known something was going on as I only booked it yesterday."

Hugh Boyle, executive chairman of Zoom, said: "The airline's flights will continue to operate and the decision to instigate creditor protection proceedings means that the demands of existing creditors are frozen while we continue negotiations on an investment package which already are at an advanced stage."

Last night, a BAA spokesman said 205 passengers booked on the Halifax and Ottawa flight were still in the departure lounge at Glasgow airport. He added a further 156 passengers booked on the 12:40pm Glasgow to Vancouver flight were subject to a 12-hour delay, as their plane had not yet left Canada.

A Scottish Government spokesman said: "This is one more symptom of the damage being inflicted by soaring fuel prices, which is why the UK government must use its own energy tax windfall to help the economy."