People Express

People Express was a Newark-based no-frills airline founded by Don Burr in 1981. It grew very quickly on rock-bottom fares, including a $149 Newark–London service, but acquisitions and debt overstretched it. It was sold to Texas Air in 1986 and folded into Continental Airlines on 1 February 1987.

How it started

People Express was founded by Don Burr and several colleagues who left Frank Lorenzo's Texas International to start it. According to Wikipedia, Burr was influenced by the British low-cost pioneer Freddie Laker. The airline leased space in Newark Airport's North Terminal, which had been little used before it arrived.

Services began on 30 April 1981 with Boeing 737 flights from Newark to Buffalo, Columbus and Norfolk. Jacksonville and Cleveland followed a month later. AirlineGeeks reports that the first flights used three Boeing 737-100s, and that tickets were sold on board rather than at ticket desks.

The heyday

Growth was rapid. By December 1981 the airline had 42 weekday departures from Newark. Its traffic, measured in revenue passenger-kilometres, rose from 650 million in 1981 to 17,638 million in 1985 (figures from Air Transport World, as cited by Wikipedia).

On 26 May 1983 People Express began non-stop Newark–London Gatwick flights with a leased Boeing 747 that had previously flown for Braniff. Fares started at $149 each way, and the route sold out. Brussels followed in 1985.

The fare structure was simple, and extras were charged for:

• Fares were paid on board.
• One carry-on bag was free, and each checked bag cost $3. Wikipedia describes it as the first US airline to charge for checked bags.
• Drinks and snacks were sold, with sodas at 50 cents a can.
• Staff were cross-trained across roles, according to AirlineGeeks.

The service earned it nicknames such as "People Distress" and "Air Bulgaria". In 1985 the airline bought Frontier Airlines of Denver, and it also acquired the commuter carriers Britt Airways and Provincetown-Boston Airlines. By August 1985 it flew to 41 cities with 4,000 employees and 72 aircraft, according to an Associated Press report cited by Wikipedia.

What went wrong

The sources point to several overlapping causes:

• Debt from expansion. The buying spree left the airline heavily indebted, just as larger rivals improved their yield-management systems and could match its fares (Wikipedia, which marks this point as needing a citation).
• A difficult Frontier integration. Wikipedia reports labour struggles at Frontier and passengers alienated by the no-frills approach, again without a firm citation. AirlineGeeks also notes service quality and punctuality suffering.
• A change of strategy. To attract business travellers, People Express added first class on its 747s, a frequent-flyer plan and conventional revenue-management pricing, abandoning its simple fares.

In June 1986 the company said it was working with an investment bank to find buyers for part or all of the airline. A deal to sell Frontier to United Airlines collapsed over union issues. Frontier's operations were stopped and the subsidiary filed for bankruptcy protection.

The last flight

The date and route of the final People Express flight are not documented in the sources we found. Wikipedia says the airline ceased to exist as a carrier on 1 February 1987, when its operations were merged into Continental Airlines through a joint marketing agreement. AirlineGeeks puts the acquisition in 1986, which fits the sale to Texas Air announced that September rather than the date operations ended.

What happened next

Texas Air Corporation bought People Express for roughly $125 million in cash, notes and assumed debt. Because of concerns about regulatory approval, it first bought Frontier's assets from People Express separately, for $176 million, and merged them into Continental, another Texas Air subsidiary. People Express's operations then joined Continental as well.

Continental kept the Newark hub that People Express had built. That hub passed to United Airlines when United and Continental merged in 2010. After the airline closed, the former North Terminal was used by the Department of Veterans Affairs during the Gulf War, and in 1997 a project began to demolish it.

The name returned briefly. A start-up called PEOPLExpress began flying on 30 June 2014 from Newport News, Virginia, but it suspended service on 26 September 2014 and never resumed. It was a separate company from the original.

Sources: Wikipedia; AirlineGeeks.

Sources: People Express Airlines (1980s) – Wikipedia, Grounded: People Express – AirlineGeeks