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Snapshot

28 Mar 2013 by Alex McWhirter

Alex McWhirter looks through the Business Traveller archive. This month: a 1985 article on US no-frills carrier People Express

The late People Express was the first “no frills” carrier to cross the Atlantic when its B747 touched down at London Gatwick in May 1983. 

Passengers, myself included, found the New York Newark-based airline a refreshing change from the European model. These were the pre-liberalisation days, when carriers on this side of the Atlantic were restricted in what they could do by the regulatory bodies.

So People Express was revolutionary for its time. Bookings were handled manually by a simple reservations facility, while passengers paid for baggage checking. They also had to pay for meals and snacks, even in business class.

Food and wine was of good quality, although the removal of ovens to free up space meant only cold food was served. In our May 1985 Business Class Wine Survey (as our Cellars in the Sky Awards were then known), the airline came third overall, just behind Air New Zealand and Qantas, although the judges concluded that it couldn’t be featured in the list of winners as its wine was not included in the ticket price.

Tickets were priced either one-way or return, with none of the book-in-advance or Saturday-night-stay rules practised by conventional rivals. It could charge less because its seat-mile costs were between five and six cents, among the lowest in the aviation industry. That is why many aspects of its business plan were later adopted by European budget carriers.

In its heyday, the airline flew transatlantic from London and Brussels, with passengers connecting to People Express domestic flights at Newark, operated by B737 and B727 aircraft. Gatwick-New York cost US$149 one-way in economy or US$450 in business. In those days, there were no hefty taxes, fees and charges to inflate the price. You could fly coast to coast for US$149 off-peak or US$199 peak, while a trip from New York to Atlanta was US$79 or US$99.

But what set the carrier apart was the way it was run. Staff were non-unionised and cross-utilised for a variety of functions. All had to hold shares in the airline. Pilots flew the planes and performed administrative duties, while customer service managers flew as cabin attendants, staffed airport counters, handled reservations and loaded the bags.

But then it all went wrong. People Express over-expanded. It bought out a couple of other airlines to build a larger network and, in the process, took on too much debt.

While its US network was limited to leisure destinations, rivals left it in peace. But once it began to serve business cities such as Atlanta, Houston, Dallas and Chicago, they fought back. Through smarter use of “yield management” systems, the likes of American and United began to compete aggressively on price.

The end came in February 1987, when People Express was taken over by Continental Airlines.

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