More than 10,000 passengers face travel chaos after luxury airline Silverjet grounds flights

Passengers left stranded in Dubai and New York have been advised to try and make alternative arrangements after the airline announced it was ceased operations today.

The carrier, which started in January last year and flew from Luton to New York and Dubai, said it failed to secure a vital new funding package.

Its last service left Dubai for Luton at 7.30am today.

But with five further flights scheduled for later today, there were fears that thousands of passengers could be left in the lurch by the sudden stoppage.

Luxury airline Silverjet had been desperately trying to secure extra funding so it can continue flying

The Civil Aviation Authority (CAA) said today that it estimated that 7,000 UK and 2,500 non-UK customers of Silverjet were affected.

The airline had been trying to secure an urgent £2.5 million cash injection from Middle Eastern investment group Viceroy Holdings.

It was part of a £12.7 million funding package agreed between the parties last month.

At the end of last month, it said record oil prices and tighter credit conditions had impacted on its working capital and left it with limited reserves. Shares in the airline were suspended last week.

Founder and chief executive Lawrence Hunt apologised to customers today and told them Silverjet would not be able to offer any refunds.

In a message on the airline's website, he said: "Your belief in us was shared by our investors - but regrettably, due to unforeseen circumstances, they were unable to unlock the finance that we needed.

"We extend our sincerest apologies to those of you who have travel plans with Silverjet in the future and at present."

A crew member photographs a Silverjet aircraft sitting on the tarmac at Luton Airport today

He added: "We are working actively with new investors who are prepared to inject new funds so we can recommence operations. If we are able to achieve this, we will make an announcement as soon as possible."

Two flights were due to leave Luton for New York at 10am and 6pm, with two return flights from New York to Luton due to depart at 7.30pm and 10.30pm. There was also a later 10.20pm departure to Dubai.

Silverjet, whose aircraft were two-thirds full on average last month, said customers should seek refunds of unused segments of tickets from the point of purchase, such as credit card company or travel agency.

The carrier has been hit by soaring fuel costs. Crude reached an all-time high of 135 US dollars a barrel last week, an increase of more than 30% since the start of the year. Prices have since fallen back to about 126 dollars.

Last week shares in the company were suspended after the group said the cash injection from Viceroy had failed to come through.

Silverjet stressed at the time that it was continuing to fly, but was in critical talks to raise alternative funding "as a matter of urgency".

The airline was hoping that the investment from Viceroy would not only repair its working capital, but help fund expansion into new areas, such as the Middle East, Far East and Africa.

Silverjet made its first commercial flight in January 2007. It achieved its highest monthly revenues in April, with more than 10,500 revenue-generating seats.

Transatlantic business class-only carriers have faced difficult times since the surge in oil prices and a number have already been grounded.

American all-executive class airline Eos, which flew between London and New York, filed for Chapter 11 bankruptcy protection late last month, just four months after its rival Maxjet collapsed in the face of rising oil costs and a stalling economy.

UK carriers which operate the same routes as Silverjet said today they would try to help the airline's passengers.

A British Airways spokesman said: "We are looking to help in any way we can."

A spokesman for Sir Richard Branson's airline, Virgin Atlantic, said: "We are introducing special fares for Silverjet passengers which start at £189 one-way to New York and £179 one-way to Dubai."

The CAA said that its air travel organisers' licensing (ATOL) scheme did not cover passengers who had booked flight-only tickets direct with Silverjet.

The CAA said UK customers who were due to fly back to London from New York or Dubai were advised to make alternative arrangements with other airlines, while passengers who booked flight-only using a credit card were advised to contact their credit card company.

The authority also said customers who paid by debit or charge card should contact their card company for advice, or check any travel insurance policy taken out about any airline insolvency cover that may be provided.

The CAA said passengers who booked flights and chauffeur drive or valet parking with Silverjet Aviation Limited, and customers who booked flights via a travel agent were protected under ATOL 9250.

These customers due to fly back to London from New York or Dubai should make their own flight arrangements with other carriers and apply to the CAA for reimbursement of the cost of doing so.

The CAA added that customers with advance flights and chauffeur drive or valet parking made direct or through a travel agent should make a claim from ATOL by contacting the CAA.