People Express May Fly Again

People Express may fly again.

People Express Airlines
Source: Wikipedia
People Express Airlines

Investors are seeking government approval for a new People Express Airlines that would carry the same name as the popular 1980s airline.

The original People Express was among the first no-frills carriers. It quickly became one of the biggest airlines in the U.S. before it was folded into Continental in 1987.

"The brand is iconic, and what people know and remember about it is low fares, great service and high frequency into markets that didn't have existing service," says Mike Morisi, the start-up's president and COO. "I think what we've identified is an opportunity to replicate that again."

Morisi, who worked for the original People Express, emphasized the airline will be a new company using the "PEOPLExpress" brand, not a re-start of the original airline.

The goal for the start-up, which is based in Newport News, Va., is to launch service by the end of summer to several cities in the Northeast and Florida, including Pittsburgh, Pa. Providence, R.I. and West Palm Beach, Fla. The start-up may consider a public offering for additional funding, says William Mayer, chairman of the budding airline's board.

But this won't be your parent's People Express. Rather than repeat the fees and no-frills service that the first People Express pioneered — and that other carriers have since copied — the new namesake carrier plans to let fliers check their bags for free and get complimentary snacks on board.

But the new People Express is trying to take flight at a time that megamergers of the industry's biggest carriers threaten to quash competition. It's also a time many smaller carriers are struggling. Direct Air and regional carrier Pinnacle Airlines filed for bankruptcy protection in recent weeks.

"It will be very difficult for them, but it's very difficult for any airline to start up and succeed," says Henry Harteveldt, a travel industry analyst.

IPO in the Future?

People Express applied last month to the Transportation Department to become a commercial carrier. It also needs certification from the Federal Aviation Administration. For now People Express is backed by private investors, says start-up chairman Mayer.

If approvals and funding fall into place, People Express thinks it can be more efficient than big airlines and fill a void left by carriers that have left some cities for more profitable routes. "I think the public is ready for the opportunity to get on a big comfortable jet at a fare that's significantly lower than anything being offered today," Morisi says.

Some airports are rolling out the welcome mat.

JoAnn Jenny, spokeswoman for the Allegheny County Airport Authority, which oversees Pittsburgh International, says it plans to enter into an agreement with People Express once the airline gets its FAA certification. Pittsburgh is no longer a hub for US Airways . While low-cost carriers such as JetBlue and Southwest have moved in, Jenny says, a need remains for flights to other cities.

Florida's Lakeland Linder Regional Airport, which lies between Tampa and Orlando, Fla. is prepared to waive fees for two years if People Express will start flying from there, says airport director Gene Conrad.

It was the same package the airport offered Direct Air, a small public charter airline that started Lakeland's first commercial air service in June. But in March, Direct Air stopped operating. Now, Conrad says, "we're looking aggressively to get someone back in there."

One thing Morisi says the new People Express won't do is repeat mistakes that led to the demise of its predecessor.

The original People Express, launched in April 1981, was immensely popular. It charged for checked bags and 50 cents for a soft drink at a time other airlines offered them for free. Passengers paid for their tickets on board, after take-off.

"People Express pioneered what we now know as the no-frills airline," says Harteveldt, who called the carrier the model for low-cost carriers such as Spirit and Allegiant.

People Express quickly became one of the biggest airlines. But it began losing money when it veered from its focus on cheap service to underserved cities. It bought more planes, launched overseas service and purchased Frontier Airlines in 1985. A year later, Texas Air bought the carrier and merged it under the Continental name.

"I believe had we stuck to the niche of serving secondary cities with efficient aircraft, People Express would still be flying today," says Morisi. "So we've committed to staying focused on that niche."

Low-cost carriers such as Frontier and Allegiant already target the type of underserved markets eyed by People Express. And as hard as it's always been to thrive in the airline industry, the current climate may be particularly tough, with high fuel prices and five large airlines dominating U.S. air, Harteveldt says.

What's in a Name?

The People Express name may also hurt as much as it helps — if it matters much at all, he says.

"Any time you pick a name of a company that has gone out of business, you risk reviving the negatives as well as the positives associated with that brand," Harteveldt says. And while Baby Boomers may feel some nostalgia for the airline, he says, "they've moved on."

George Hobica, founder of Airfarewatchdog, says passengers may want to see if People Express has staying power before buying a ticket. "I would be leery about booking on a new low-cost start-up," he says.

But Conrad of the Lakeland airport is optimistic. "I feel confident about People Express," he says. "I know there's been a lot of start-ups in the past, but it's the aviation business, and you just have to keep pushing."