PeoplExpress, a fast growing no-frills carrier of the 1980s, is returning in name only. A new company, wet-leasing planes from another airline, uses the old name and the most of the old business plan to start service soon from Newport News (VA).
But in an erroneous set of conclusions, some are calling the business plan a radical departure from today’s airlines. In fact, the bare-bones, no-frills service offered by the new PeoplExpress was used by its forerunner and is truly the model for today’s Ultra Low Cost Carrier (ULCC), long before Ireland’s Ryanair and the USA’s Spirit Air adopted the model.
You pay for everything: soft drinks, checked baggage, and so on. There have been refinements since then, expanding the fee-based formula of the original PE, but fundamentally the ULCCs of today are based on the PE of yesterday. The new PE simply follows the ULCC approach.
The new PE will wet-lease Boeing 737-400s from a Las Vegas airline, Vision. Jeff Erickson, former CEO of Midway Airlines, Reno Air, Atlas Air and TWA, is the CEO of PE. We’ve known Erickson for more than 20 years. If PE is well-funded (and we don’t know the finances), we believe Erickson can indeed find a niche for the carrier as legacy airlines continue to give short shrift to smaller markets. Newport News doesn’t strike us as an obvious place to headquarter or hub an airline, but this decision was made before Erickson came on board.
Didn’t O’Leary state that Southwest Airlines and the availability of demands based pricing software were the inspirations for his version of Ryanair (ie the post, not pre-EC deregulation version)?
I flew on People Express a number of times back in the Mid ’80s. at the time their prices were ubelievable, and the idea that you had to pay $1 for a soda and $2 for a bag was not offensive given that the ticket was a small fraction of the price of a major carrier (I think I paid $33 to fly from newark to buffalo, cheaper than driving, my sister flew new york to london for $99, also cheaper than driving 🙂 )
the planes were old and a bit ratty, they had the first come fist served Southwest style seating system, but boy oh boy were they a deal.
by comparison, today’s mainline carriers have the old ratty planes and charge a fee for breathing, while the LCCs compete on features while still (barely) beating mainline carriers on price due to better fleet planning.
Do we really need another wanabe LCC using old fuel guzzling aircraft (soon to be three generations back?)
I have seen it over and over again, I call it the race to the bottom.
One guy does it, another one wants to, the only way to get in is to go cheap. At one time a CEO that really understood business (and cared about the employee and company’s future) did not buy that, you get what you pay for and below a certain point you build in failure.
Today’s climate says, I get what I want now and I could care less about the future failure.
Then you hear from your CEO, well its a competitive business. Hmmm, if you had stayed out of it, it would be competitive but not a death spiral. You caused it but we pay for it.
Its obvious that this will fail, not sure they can lower the bar any lower but its possible.
Me, I am willing to pay a decent fare on a good airlines with some foot room. I don’t have to go places all the time. When everyone has raced to the bottom there is no foot room to be had (sans nosebleed first class and I am not nosebleed)