An Oxford travel agent is believed to have sold up to £1m worth of airline tickets which passengers later discovered were useless.

Oxfordshire people are among customers who have lost up to £1,500 each after the closure of Mas Travel, based in London Road, Headington.

One airline, BMI, is honouring all tickets sold by the company, but Internet blogs are full of complaints from passengers forced to pay thousands of pounds for replacement tickets at the last minute.

According to the trade magazine Travel Weekly, Mas Travel was issuing tickets on behalf of 15 leading airlines. It was advertising cheap air fares via the Internet, taking money from consumers, but allegedly failed to pass the cash on to the airlines.

When aviation authorities became aware of the concerns they swooped on its offices. However, the owners had already left and are now believed to be in Pakistan.

Danish Zaheer, of 82 Collinwood Road, and Siddiqi Akhtar, of 47 Collinwood Road, are listed at Companies House as directors.

Jim Hall, of Oxfordshire Trading Standards, said the matter was in the hands of aviation authorities, but confirmed his office had received several calls from local people affected. Mas Travel's website says it is "Atol protected 76815".

But Atol (Air Travel Organisers' Licensing) said in a statement: "The company did hold an Atol licence, which is now suspended.

"However, as the transactions in question were direct airline ticket sales, they do not come under the Atol scheme, which predominantly covers package holidays."

Complaints on the Internet include one person who said he was told his tickets had been cancelled by mistake, so had to buy replacements at a higher cost.

Another complainant said: "Me and my friend booked a round-trip ticket to Manila last July.

"Because the fare was very attractive we booked and paid right away. From time to time we requested our ticket and they replied a few times that it was in the post."

He said the firm then told them they should print out their booking confirmation which would serve as an e-ticket.

Subsequently, Lufthansa rang them to say MAS Travel had not passed on the money.

He said last-minute tickets would cost £1,400 each. Mas Travel's answerphone says: "The office has now closed. Please leave your name and number and we will get back to you."

IATA spokesman Quentin Browell said: "IATA can confirm that it is currently investigating the activities of the agent and is working closely with the police on the matter.

"Due to the confidentiality of the investigation, there is no further information currently available."

The Atol scheme is supposed to carry out checks on the tour operators and travel organisers it licenses, and requires a financial guarantee called a bond, which is lodged with Atol.