ZOOM Airlines declared bankruptcy yesterday, signalling the end of low-cost travel between Bermuda and the United Kingdom.

The transatlantic carrier announced it had begun insolvency proceedings, with operations suspended immediately and all flights cancelled. The airline's web site was inaccessible by yesterday afternoon.

Customers booked on future Zoom flights were advised to contact their credit card company or travel agent for refunds.

The collapse of the low-cost airline has left dozens of Bermuda university students scrambling to book new flights back to the UK before colleges reconvene next month.

A number of businessmen and tourists, who have also travelled to the island on Zoom, are also thought to be temporarily stranded here.

"We have done everything we can to support the airline and left no stone unturned to secure a refinancing package that would have kept our aircraft flying," Zoom founders Hugh and John Boyle said in a release to media yesterday.

"Even as late as lunchtime today we believed we had secured a new investment package to ensure future operations but the actions of creditors meant we could not continue flying. Having been unable to complete the investment package, the directors of Zoom had no option but to instigate insolvency/administration proceedings."

They said rising fuel costs and the general economic downturn were affecting airlines the world over.

"The collapse of Zoom 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.

"We would like to thank the many thousands of passengers who chose to travel with Zoom during the last seven years and (the) efforts of the airline's staff. We are extremely sorry the airline could not continue."

The Ottawa-based airline began operating a service between New York's JKF, London Gatwick and L.F. Wade International airports just over a year ago.

Last night, Opposition Leader Kim Swan said the company's closure represented a serious blow to the island at a time when the industry was already vulnerable.

"The collapse of Zoom Airlines is a disappointing development for Bermuda and reveals how precarious and difficult the airline industry has become under the weight of rising fuel prices and intensifying competition," he said.

"It puts tremendous pressure on our marketing operations. Potential visitors will be less inclined to travel because of escalating ticket prices while airlines, facing extreme pressures, are casting unforgiving eyes on the least profitable, least busy routes.

"Our particular concern in this instance is that the Premier has chosen this period to reorganise our North American sales operations, just at a time Bermuda needs its most focused and dedicated effort. Without a maximum co-ordinated effort to sell Bermuda during this period of tumultuous change, we are extremely concerned that Bermuda has been made more vulnerable than its competitors."

Last April Premier and Transport and Tourism Minister Ewart Brown said the deal which allowed Zoom to fly to the island was part of an overall plan to reduce fares.

"It has been this Government's strategy to encourage competition in air services in order to increase seat availability and choice as well as lower fares, particularly on the London route, and as such we at the Ministry of Tourism and Transport are thrilled that we have been able to deliver on our promise of providing added service in this market."

He expressed hope that tourism numbers would rise as a result of the new flight, however Zoom was bombarded with complaints shortly after the first London-Bermuda flight touched down last June. The airline was forced to extend travel ¿ to the US east coast, across Greenland, past Iceland and then down through Scotland ¿ in order to get from Bermuda to London because it did not have an Extended Range Twin Operations Licence. The twice-weekly flight ended up being two hours longer than the British Airways flights.

Complaints ¿ and praise ¿ of the carrier continued.

C Travel CEO and general sales agent for Zoom Carl Paiva praised the effect the airline had on lowering travel costs between here and the UK. Although reluctant to speak publicly until he had made direct contact with Zoom representatives, he vowed to honour a C Travel competition promising two free tickets to the UK to the customer that pushed the agency over the $1 million mark in Zoom seat sales this year. And he promised to assist clients booked on Zoom in making alternative travel arrangements.

"We've certainly got the promotion out there and we would honour any winner that we had," Mr. Paiva stated. "Anyone who has booked through us, we don't pay Zoom until they travel ¿ their money is protected."

If the carrier is forced to stop operating Bermuda residents flying to the UK will most certainly feel the effect, he added.

"It would be sad because British Airways has a monopoly. We will more than likely see fares go up again. In any healthy market it's always good to have competition. That's the reason why Government brought in JetBlue, to bring down airline costs (to the United States). What will happen now I expect, is higher fares, especially when you combine the (BA monopoly) with rising fuel costs."

More than 2,000 people have booked flights on Zoom through C Travel, the CEO said, describing the partnership as "highly successful".

"We were invited and saw it as a very good opportunity for Bermudians to travel ¿ and I still do think of it that way. Bookings through C Travel have been extremely successful in the last year. We've had nothing but praise from our clients and I personally have a stellar relationship with (Zoom representatives)."

According to airport general manager Aaron Adderley, the last flight out of the island departed yesterday afternoon.

"Zoom's last flight just pushed back from the gate," he said. "Zoom has posted a press release on their web site stating all the pertinent information. (It) speaks to what happened, how passengers will be handled by other carriers and how to obtain refunds."

Premier Ewart Brown later issued a statement on the airline's woes. The Mid-Ocean News did not receive it by press time.

Rumours of problems began circulating in March when the Bermuda carrier's sister company, Canada's Zoom Airlines Inc., nixed plans for a low-cost flight between Toronto and the island.

The airline blamed UK air authorities for the cancellation of the weekly service between Toronto, Bermuda and London. According to a spokesperson, the UK Government refused to grant the Canadian airline's application because UK airlines were having difficulties operating in Canada at the time.

The airline's financial problems did not prevent John Boyle from marrying Donna Barrie in a lavish ceremony at the Fairmont Hamilton Princess on Friday, June 13. Approximately 150 friends, family and business associates, including a number of celebrities, descended on the island for the service according to reports in the UK's Mail on Sunday. The entrepreneur, also the owner of Scottish football team Motherwell, was said to have invited Scottish entrepreneur Tom Hunter, lingerie tycoon Michelle Mone and big names from the sporting world, to view his nuptials.

Mr. Boyle made his wealth as co-founder and chairman of Direct Holidays and now invests in companies in the fields of technology, media and printing sectors.

Both Zoom Airlines Inc., based in Canada and Zoom Airlines Ltd., based at Gatwick, have begun insolvency proceedings. Affected are 450 staff in Canada and 260 staff in the UK. The airline operated flights from six UK airports - London, Gatwick, Glasgow, Manchester, Cardiff, Belfast, Paris and Rome. And it flew to eight destinations in Canada, New York, San Diego, Fort Lauderdale and Bermuda.

Cheryl Hayward-Chew, president of Meyer-Franklin Travel, said Zoom has indicated there will be special pricing for its existing ticketholders available from British Airways, but at this time the pricing has not been confirmed.

"We deeply regret the fact that we have been forced to cease all Zoom operations," the Boyle brothers said yesterday.

"It is a tragic day for our passengers and more than 600 staff. We are desperately sorry for the inconvenience this will cause passengers and those who have booked flights."