The Clinton Herald, Clinton, Iowa

Business & Technology

June 6, 2014

It's back! The world's cheapest airline flies again

WASHINGTON — Do checked-bag fees, $2 junk food "snack packs" and chronic overbooking make you nostalgic for an earlier, even less glamorous era of air travel? Then PeoplExpress is the airline for you. This week the relaunched version of People Express, the somewhat iconic 1980s-era discount carrier, began selling tickets for the first time in more than two decades for flights in markets that the major carriers have abandoned. In the early 1980s, the original version of the airline thrived on its ultra-cheap fares. But by 1987 debt, over-expansion and a reputation as "People Distress" had transformed the airline into one of the industry's most notorious failures.

So why would a group of entrepreneurs want to resurrect the brand? PeoplExpress hardly has the retro-transcontinental allure of a name like Pan Am. If anyone still remembers People Express fondly, it's probably for its cheap fares, ugly planes and the unswervingly perky demeanor of its employees - all of whom were paid in stock (as well as salaries) out of the belief that an invested employee is a committed, joyous employee. The January 1985 issue of Texas Monthly described the results of this compensation scheme in memorable terms:

You know the look that comes over the faithful at the mention of Sun Myung Moon? That's the look People Express personnel get when they describe their company.

Cult-like atmosphere aside, People Express still managed to be one of the most innovative U.S. airlines ever to light up an air traffic controller's radar. Texas Monthly inadvertently highlights that point in this gem:

"With smart fares and smart folks like yourselves, it's no wonder we're the fastest-growing airline in aviation history," enthused Captain Bob Slater as part of another curious PE phenomenon, the inflight commercial.

Of course, 29 years later, that inflight commercial isn't curious. It's as commonplace as several other People Express innovations that debuted with the airline in 1981, including checked-bag fees (People Express offered them first), meal-free flights, and snacks and beverages for purchase. Once considered extremes of the post-deregulatory U.S. skies, such features are now acceptable irritations that big legacy carriers use to pad their expanding bottom lines.

What made People Express work so well for a brief period were its cheap fares offered on short, cheap-to-operate routes under-served by the big carriers, such as Newark (the airline's base) to Buffalo, Columbus, Sarasota and Norfolk. Soon, however, full planes bred arrogance, and People Express expanded into markets where it competed directly with - and lost out to - the legacy carriers, including a Newark-London Gatwick route that went for $149 one-way. It didn't help that the airline didn't have a computerized reservation system, but rather allowed passengers to pre-book via phone and then - no joke - pay cash for their tickets on the plane, as if it were a bus. Overbooking rates, unsurprisingly, approached 200 percent. In 1987, crushed by debt and hubris, People Express was merged into Continental, never to be heard from again.

Who's nostalgic for this in an age when low-cost, low-frills carriers such as Spirit Airlines are common? PeoplExpress has an answer posted on its website: "It's time to dispel the myth that low air fares have to mean poor service or an impersonal experience." That's very nice, but it's hardly the basis for a successful business plan. After all, Spirit recently pulled off the remarkable achievement of becoming the U.S.'s most hated and its most profitable airline at the same time, suggesting that smiles aren't important so long as the price is right.

PeoplExpress will do more than smile, of course. Like its Reagan-era predecessor, it will fly theoretically under-served routes such as Pittsburgh-Newport News/Williamsburg. Its success will depend on whether people really do want and need to fly those routes. If they don't, PeoplExpress won't last much longer than its ill-starred predecessor.

Adam Minter is an American writer based in Asia, where he covers politics, culture, business and junk. He is the author of "Junkyard Planet: Travels in the Billion Dollar Trash Trade."

 

1
Text Only
Business & Technology
  • Earns United Continental [Duplicate] United Airlines posts 2Q profit, reversing 1Q loss CHICAGO (AP) — United Airlines is making money after a slow start to the year.The airline’s net income in the second quarter hit $789 million, topping Wall Street expectations and marking a turnaround from the first quarter when United was the only m

    July 25, 2014 1 Photo

  • GM profit 2Q falls 85% on recall costs DETROIT (AP) — Recall expenses chopped $1.5 billion from General Motors’ bottom line in the second quarter, as it added up the costs of repairs for nearly 30 million cars and set aside funds to compensate victims of small-car crashes.The automaker, w

    July 25, 2014

  • Taiwan plane crash photo Air travel a leap of faith for passengers WASHINGTON (AP) — Airline travel requires passengers to make a leap of faith, entrusting their lives to pilots, airlines, air traffic controllers and others who regulate air travel.Even after a week of multiple tragedies in worldwide aviation, “There

    July 25, 2014 1 Photo

  • Technology plays key part in battling police brutality (with VIDEO)

    Allegations of police brutality are nothing new -- as long as there has been law enforcement, citizens have registered claims that some officers cross the line. But in the last few years, the claims of excessive force are being corroborated with new technology from cell phone cameras, police dash-cams and surveillance videos. 

    July 24, 2014

  • Facebook continues moneymaking trend

    Facebook seems to have figured out - for now at least - the holy grail for all media right now: how to make money selling mobile ads.

    July 24, 2014

  • Has the iPad lost its swag?

    The company reported this week that sales of its sleek, pricey tablet were down 19 percent from last quarter and 9 percent year-over-year.

    CEO Tim Cook tried to reassure investors that Apple's new partnership with IBM to sell its devices to IBM's corporate customers will help make iPads ubiquitous in the workplace.

    July 24, 2014

  • Stewart McCaskill photo McCaskill settles into new role at shoe store CLINTON — An Oklahoma boy at heart, Stewart McCaskill is settling into Clinton and Brown’s Shoe Fit.The 35-year-old has worked with the Brown’s Shoe Fit company for seven years. His brother-in-law, who manages a Brown’s in Colorado, brought Stewart i

    July 24, 2014 1 Photo

  • Earns Mcdonalds [Duplicate] McDonald's profit slips; U.S. sales decline OAK BROOK, Ill. (AP) — McDonald’s Corp. said its profit slipped in the second quarter as sales in the U.S. continued to flag.The world’s biggest hamburger chain has been struggling to boost sales in its flagship market amid intensifying competition,

    July 23, 2014 1 Photo

  • SEC poised to end $1 a share for some money funds WASHINGTON (AP) — Regulators are expected to vote Wednesday to end a longtime staple of the investment industry — the fixed $1 share price for money-market mutual funds — at least for some money funds used by big investors.The idea is to minimize the

    July 23, 2014

  • China McDonald's KFC [Duplicate] China meat scandal hits Starbucks, Burger King BEIJING — A suspect meat scandal in China engulfed Starbucks and Burger King today and spread to Japan where McDonald’s said the Chinese supplier accused of selling expired beef and chicken had provided 20 percent of the meat in its chicken nuggets.C

    July 22, 2014 5 Photos

Facebook