History Of People Express





History Of People Express  


People Express has a history that dates back to 1980, when former president, Donald Burr and several previous key executives of Texas International Airlines in a joint venture formed People Express. The carrier based out of Newark, New Jersey would provide service between New Jersey and New York and several northeast states.

The concept of this air carrier was to provide air passenger service at the cheapest airfare possible. To accomplish the feat, the carrier provide no frills and its labor force was a non-union workers. With airline deregulation in 1978, over 170 new air carriers had entered into the airline market, as did People Express.  


With the intense competition from larger airlines, it become difficult for new carriers to keep their doors open. During this period of time, analysts were predicting at least a third of the new air carriers would be able to stay aloft. However, that did not turn out to be the case, as over 90 percent of these new air carriers were unsuccessful and force to shut down. This would include People Express. With the introduction of People Express to the airline market, it further eroded the industry. With its slashed air fares which created airfare wars throughout the industry and, many air carriers attempted to go non-union in an effort to maintain their market share. As a result airfare profits were down and it had cost the industry over 70 million dollars in the first nine months of the year. Frank Lorenzo, owner of Texas Air was a pioneer of such business tactics; slashing airfares and union busting. On September 15, 1986, People closed its doors and re-opened as part of Texas Air.

In 1985, People Express bought out Denver-based Frontier Airlines. The combined company became the United States' fifth largest airline, with flights to most major U.S. cities, as well as an additional transatlantic route to Brussels. During this period, People Express also purchased midwest commuter carrier Britt Airways and Provincetown-Boston Airlines (PBA), a regional airline with route networks in New England and Florida. The aggressive purchasing spree placed an enormous debt burden on the carrier at the same time major legacy carriers' improved yield management schemes enabled them to compete better with People Express on fares. Furthermore, integrating Frontier's operations caused labor struggles with the newly absorbed airline, and the change to a low-fare, no-frills mentality alienated Frontier's passengers.

Debt pressure on the carrier forced a change in philosophy, as People Express sought to lure business travellers who were willing to pay higher fares. Aircraft cabins were redesigned to include a first-class cabin, a frequent flyer plan was initiated, and the simplified fare structure was abandoned in favor of a more traditional airline industry pricing scheme. The failed integration and enormous debt stretched People Express too far, and in June, 1986, the company announced it was working with an investment bank to seek buyers for part, or all, of the airline. A deal to sell Frontier off to United Airlines fell through due to the inability of United to agree to terms with its unions on how to incorporate Frontier's staff, leading People Express management to cease Frontier's operations and file the subsidiary for bankruptcy protection.

In the end, People Express was forced to sell itself entirely to Texas Air Corp for roughly $125 million in cash, notes, and assumed debt. Due to concerns about regulatory approval for the purchase, Texas Air purchased the assets of Frontier from People Express in a separate transaction worth $176 million. People Express ceased to exist as a carrier on February 1, 1987, when its operations were merged into the operations of Continental Airlines, another Texas Air subsidiary, under a joint marketing agreement.

People Express' spartan, no-frills service earned the carrier several derisive nicknames, including "People Distress" and "Air Bulgaria" (a sarcastic reference to the poor customer service associated with Eastern Bloc countries during the Cold War).

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