City Star Airlines, based in Aberdeen, has ceased flying. Services have been cancelled and passengers told to contact their booking agent or credit-card company, meaning many could be left out of pocket.

The carrier flew scheduled services between Aberdeen and Scandinavia – operating to Oslo, Kristiansund and Stavanger – as well as charter operations.

Fifty-five people have lost their jobs and about 100 passengers a day been stranded.

Aberdeen Airport impounded a City Star aircraft on Wednesday, triggering the failure amid concern about its financing.

It is the second airline operating from the UK to be brought down by the current credit squeeze, following the demise of MaxJet on Christmas Eve.

City Star operated a small fleet of 32-seat Dornier turbo-prop aircraft and had been in problems since November when one of the aircraft was damaged on the ground at Aberdeen.

Plans for a sister start-up airline to fly between Aberdeen and Houston, City Star Executive, were put on hold in December. The Houston service would have been Aberdeen’s first transatlantic route.