All-business-class airline Eos ceased its daily London Stansted to New York JFK service this week after filing for Chapter 11 bankruptcy protection.

The grounding of Eos follows the collapse of Maxjet’s transatlantic scheduled service last December, but the news has come as a shock to many travellers because it had been thought Eos had a viable business model. It operated B757 narrow-bodied planes (which can accommodate up to 220 passengers) with just 48 fully-flat business class seats.

Eos also provided first class standards of onboard service. All this was offered for lower rates than you would pay to fly with British Airways, Virgin Atlantic or American Airlines out of Heathrow.

US carrier Eos also planned to launch additional flights next month from Stansted to New York Newark, followed by Dubai in July, and intended to introduce New York JFK flights out of Paris in the near future.

But it seems Eos has fallen victim to the credit crunch, the soaring cost of aviation fuel (a 48-seater B757 is not fuel-efficient) and fiercer competition from conventional airlines.

Last November, American Airlines launched a competitive service from Stansted to JFK with attractive corporate fares, and is planning to add an extra daily service starting in August.

The new UK-US “Open Skies” regime allowed Delta and Continental to enter the Heathrow to New York market and both have been offering keen business class fares to establish themselves.

Rivals Silverjet (which flies Luton-New York Newark) and British Airways, which operates between Heathrow, JFK and Newark, have both stepped in to accommodate stranded passengers at special rates.

Silverjet (another all-business-class carrier) says it will honour the price which Eos passengers paid for their tickets (subject to a minimum sum paid) while BA says it will make available Club World (business class) seats at a special rate. BA said: “Conditions such as advance purchase and minimum Saturday night stay will also be waived to enable Eos passengers to travel as per their original plans.”

Passengers who bought their tickets in the UK using a UK-issued credit card will be protected for any losses under section 75 of the 1974 consumer credit act. But note that holders of credit cards issued outside the UK may not enjoy similar protection.

Charge card firms like Amex and Diners aren’t legally obliged to make refunds in cases like this but, in practice, most do for the sake of customer goodwill.

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Report by Alex McWhirter