http://www.sundayherald.com/news/heraldnews/display.var.2436884.0.risky_exp= ansion_strategy_brought_airline_down.php Risky expansion strategy brought airline down High oil price helped bring Scottish brothers=E2=80=99 dream to an end By Kenny Kemp THE FLIGHT path from Zoom to doom was an accelerated one. The rapid collaps= e of the Canadian-registered airline, owned by Scottish brothers John and H= ugh Boyle, has resulted in misery and anger for thousands of holidaymakers. Many Scots hit by the collapse have been returning home this weekend after = finding alternative routes on scheduled airlines - often on flights costing= hundreds of pounds more than they expected. Former Zoom customers have eve= n accused the other carriers of making money out of the misfortune, with so= me flights costing =C2=A32500 for a single transatlantic fare. While the collapse of Zoom highlights the precarious situation of some smal= ler low-cost airlines in the face of high oil prices and the credit crunch,= airline industry insiders are surprised that Zoom went bust during the hol= iday season when revenues were highest. advertisement Question marks have been raised over why it happened so quickly and without= warning. And it also raises serious issues for the Scottish government's H= omecoming in 2009, which was relying on thousands of Canadians heading to S= cotland on Zoom flights to find their roots and renew family connections. The Sunday Herald has discovered there were tell-tale signs that the airlin= e was in financial trouble. The domino effect meant that once the creditors= lost faith in the airline, it was only a short time before Zoom's ultimate= failure. Zoom owes its creditors in excess of =C2=A360 million, according to a list = filed with the Office of Superintendent of Bankruptcy Canada. The debt incl= udes =C2=A340m in "deferred revenue", which normally refers to money taken = in advanced ticket sales but not yet paid out to creditors. "The company is in the process of determining its next course of action in = its reorganisation," according to filings. "At this time it is uncertain wh= ether or not any flights will be resumed or the status of any refunds due p= assengers who have pre-paid flights." The filings show that Zoom owed =C2=A31m to the operator of Pearson Interna= tional Airport, =C2=A32m to the International Lease Finance Corporation, th= e world's largest aircraft leasing organisation, and =C2=A3750,000 to Imper= ial Oil for aviation fuel, among others. In February, Zoom took delivery of= a Boeing 757-200ER plane on a 56 month lease. "We have done everything we can to support the airline and left no stone un= turned to secure a refinancing package that would have kept our aircraft fl= ying," Zoom co-founders Hugh and John Boyle said in their statement. "Even as late as Wednesday hours before collapse on Thursday we had secured= a new investment package, but the actions of creditors meant we could not = continue flying." Hugh Boyle also said that he believed the majority of the= 40,000 passengers affected by the collapse would get their money back. But the die was cast for the Boyle brothers and their team when decisions w= ere taken over the last 18 months to expand. Zoom launched flights from London Gatwick to San Diego only two months ago,= several years after BA pulled out. Airport officials there wooed the airli= ne with about $300,000 in financial incentives, beating San Francisco and S= eattle. Early this year Zoom started flying from Canada to Italy. Insiders = say this was an extremely high-risk strategy in the current economic situat= ion. Most airlines have been hedging the price of fuel as it has increased = to $130 a barrel, but Zoom has not been able to hedge enough to keep its co= sts down. At the start of last week Zoom was in difficulty. It had clocked up an outs= tanding bill of $400,000 at Calgary airport alone. When the pilots went to = refuel their aircraft, the authorities refused to give them credit. From th= is point on it was difficult for the airline to move. The Boyle brothers had been working to refinance the business to give them = the cash to see them through until next year but their bankers, Bank of Sco= tland, are also facing tougher times and weren't convinced that it was a go= od bet. But what has upset stranded passengers is the abysmal line of communication= s after the collapse of the airline. Canadian daily newspaper the Globe and= Mail reported that an Edinburgh-based designer was the first to know. Xand= er Forsyth was one of 200 passengers packed into a room at the Halifax airp= ort, where they were given little information. The paper said: "Mr Forsyth = finally pulled out his iPhone and tapped the word Zoom into Google. And the= re it was - news that the budget carrier's entire fleet had been grounded o= ver non-payment of fees. "With a slight fear of being tackled by police I h= opped on the highest counter I could see and shouted out the news," the des= igner said. =0A=0A=0A <<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>> If you wish to unsubscribe from the AIRLINE List, please send an E-mail to: "listserv@xxxxxxxxxxxxxxxxx". Within the body of the text, only write the following:"SIGNOFF AIRLINE".