DAVID LEASK, CATHERINE FEGAN, and WILLIAM TINNING

Low-cost airline Zoom suspended all operations last night as industry experts warned many of its rivals would fail to see out the winter.

The transatlantic carrier, owned by Scottish travel entrepreneurs John and Hugh Boyle, cancelled all flights, blaming an "unprecedented rise" in fuel costs.

Its announcement came after a day of confusion that left hundreds of passengers stranded in airport lounges in Scotland and Canada waiting for planes that were never to take off and a Zoom jet was impounded at Glasgow Airport.

Zoom, which is registered in Canada and Britain, is effectively the first Scottish casualty of an airline crisis sweeping the world. Yesterday carriers in Ireland, Italy, Russia, Slovakia and Hungary also reported serious difficulties.

The Herald understands hundreds of Zoom customers are now stuck abroad and desperately trying to find an alternative way home. Thousands more have just seen their bookings cancelled, with no guarantee they will get their money back. Virgin, British Airways and other rivals have offered to help.

Brothers John and Hugh Boyle yesterday said they were "desperately sorry" to their customers and more than 700 staff, who also face an uncertain future.

In a statement issued by the airline, they said: "The suspension of operations 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."

Hugh Boyle, who owns four-fifths of the company, had spent yesterday afternoon scrambling to put together a rescue package. He failed to do so. Creditors, however, had taken fright after one of Zoom's seven Boeing jets was grounded in Calgary, Canada, by its leasing company, and another impounded in Glasgow for debts to air traffic controllers in Britain and Europe. Scores of passengers were stuck in Canada, leading to what was described as a "mob scene". In Glasgow hundreds more waited, causing a "stampede" for information.

Throughout the day the company sought to reassure customers that it would continue to operate as normal, despite seeking protection from its creditors through Canadian bankruptcy proceedings. By the evening, however, it became clear its planes could not be refuelled anywhere in the world and the company opted to seek full administration.

The airline had tried to take on established operators on core transatlantic routes, including Glasgow to Toronto and Vancouver and Gatwick to New York. Until last night there were believed to be three seats for every two passengers wishing to fly from Scotland to Canada.

One rival on the route, Edinburgh-based flyglobespan, yesterday said it was sorry to see Zoom fail. Its chairman, Tom Dalrymple, said: "I think it was inevitable that the industry's over-capacity in seats would eventually take its toll." Mr Dalrymple, however, said he believed the transatlantic business remained "strong and viable".

Soaring fuel prices have seriously hurt the world aviation market. Zoom said its operating costs had jumped £25m in the last year. David Kaminski- Morrow, of Flight International, the industry bible, yesterday said he expected to see other casualties of the downturn. "The run of airline bankruptcy is not going to end any time soon," he said. "This winter we are going to see more airlines going under with the ones with smaller fleets and weaker cash positions likely to be the most vulnerable."

Zoom has 450 staff in Canada and another 260 in Britain. The Boyle brothers were last night said to be distraught. John Boyle was in hospital undergoing shoulder surgery and Hugh Boyle was unavailable for comment.