Profile: John Boyle, co-founder of Zoom airlines

More than 40,000 passengers will lose millions of pounds in ticket fares after the collapse of Zoom, the low-cost transatlantic airline.

The bankruptcy of Zoom, which operated from Britain to Canada and the United States, stranded hundreds of holidaymakers yesterday and thousands more could lose the full value of their tickets.

John and Hugh Boyle, the Scottish billionaires who founded Zoom five years ago, urged passengers to reclaim their losses from travel agents, insurance companies and credit card protection schemes. However, only 10 per cent of travel insurance policies cover passengers if their airline collapses and people who paid with debit cards will receive no cover.

The Government has urged the insurance industry to change its rules to include collapsed airlines, and the Air Transport Users Council, which represents passengers, has demanded meetings with insurance companies to press for a change.

The council has also proposed establishing an emergency fund to bail out passengers on failed airlines. This would be paid for by a levy on all fares, which has made the idea unpopular with airlines.

Any bail-out, though, will come too late for Zoom’s customers and the best hope for many will be to reclaim fares paid using credit cards. Zoom said that 4,500 British passengers were scheduled to fly with it in the coming week, including 650 this weekend.

Robert Hainey, 74, booked flights with Zoom on Tuesday for himself and his wife Janette to travel to Ottawa to visit their family to celebrate their golden wedding anniversary.

He said: “I paid with my debit card so I have lost £700. The money came out of my account the day the company went under. It is unbelievable, if anyone else stole money like that the police would be involved.”

Geoff and Ailsa Horton, from Huddersfield in West Yorkshire, said they were heartbroken after learning that their flight to Calgary in Canada would not be leaving Glasgow. They were flying out to visit their son.

Mrs Horton said: “We have planned for this trip for more than a year. I haven’t seen my son for almost two years and he had taken this week off work to spend time with us.”

Mrs Horton’s friend, Millie Turner, added: “This was meant to be the holiday of a lifetime for us. Aside from all the money we have lost we were so looking forward to it. Zoom were so uninformative. We are disgusted.”

More than 4,000 British passengers were due to return from Canada this week and they will now have to make alternative arrangements. British Airways and Virgin Atlantic are offering discounted one-way fares for Zoom customers.

One of those stranded was Maurice Edu, a new signing for Rangers Football Club. The American international had been booked on a flight from Canada on Thursday and the Glasgow club had to make a last-minute change to get him to Scotland.

The full extent of Zoom’s financial difficulties emerged on Thursday when some of its planes were grounded at Glasgow and Gatwick airports after a failure to pay European and British air traffic control fees. Creditors have also seized one of Zoom’s aircraft in Canada and suppliers insisted on cash payment to refuel its planes.

Zoom is the latest airline to go bankrupt this year as rising fuel costs and the worsening economic environment make conditions tough for carriers.

Aviation analysts have given warning that even more airlines could be grounded in the coming months.