UK carrier Ascend Airways has entered liquidation after just three years of operations.
The firm's management cited soaring fuel costs, rising domestic expenses and an inability to secure contracts as key factors behind the collapse.
The airline, which provided aircraft to carriers including Oman Air, Air Sierra Leone and TUI Airways, informed crew of the immediate cessation of operations on April 27.
An insider told The Sun: "It's gone bust today, we got the news this afternoon. We've all been given the letters that it's all going into liquidation."
Company executives delayed any public statement until flight YD187 from Muscat had landed safely at Stansted Airport.
A staff email attributed the failure to mounting economic pressures, sharply rising UK operating costs and the inability to secure sufficient business.
The source added employees had feared the worst for months as unpaid bills mounted and financial difficulties deepened.
The insider said: "It's to do with the economy, we couldn't get contracts, the UK is a lot more expensive than Europe, the fuel situation had a massive effect on it as well."
Ascend Airways collapses into liquidation as staff blame costs, fuel crisis and failed contracts
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Ascend Airways had placed its hopes on obtaining an IOSA licence in March, which would have opened access to international routes, but the attempt was unsuccessful.
Negotiations with potential rescue partners also collapsed after they declined to take on enough aircraft to maintain viable operations.
The insider said: "It's 40 per cent cheaper to use airlines in Europe than the UK because taxes are too high."
Staff expressed frustration at recent hiring decisions, with concerns management had relied heavily on securing the certification.
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The collapse comes as warnings intensify across the aviation sector over the impact of rising fuel costs
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József Váradi, chief executive of Wizz Air, warned that European carriers could face collapse by September if jet fuel prices remain at current levels.
The airline boss said the seasonal downturn after peak summer demand would be more severe this year due to cost pressures linked to the Iran war.
"At the moment, all airlines are selling against summer demand, which is the highest-priced capacity during the year, but you run out of steam by the end of June."
Benchmark European jet fuel prices reached $1,838 per tonne at the start of April, more than doubling from $831 in February.
Mr Váradi said: "Airlines go bust two times a year, in September and February, airlines with weak liquidity positions will come under immense pressure in September time."
He predicted a sharp reduction in flight capacity after the summer season, with carriers expected to withdraw routes in September and October.
The airline's chief iindicated that financially weaker airlines and national carriers such as British Airways and Air France could face significant cuts.
Germany’s Lufthansa has already removed 20,000 short-haul services from its summer schedule, citing unprofitable routes driven by high fuel costs.
Mr Váradi added that fuel prices could remain elevated for up to 18 months regardless of developments in the Strait of Hormuz, a key global shipping route responsible for around a fifth of oil and gas flows.