ON THE EXPRESSWAY TO OBLIVION
By Joe Brancatelli
July 3, 2014 --Want to know exactly how constricted the nation's airline system has become? On an average day, there are about 23,000 flights and 70 percent are controlled by three carriers: United Airlines, Delta Air Lines and the recently merged American Airlines and US Airways. Throw in Southwest Airlines, JetBlue Airways and Alaska Airlines and more than 90 percent of U.S. scheduled commercial service is in the hands of six players.
Given the inadequate—and often downright incompetent—service offered by the American Aviation Oligarchy, you'd think it would be cause for celebration whenever an airline start-up comes roaring down the runway. After all, what could be bad when entrepreneurs get together, raise capital, dig up a few planes and search for flying room in today's concentrated air space?
But then there's People Express, which limped its ways onto the national route map on Monday from its home in Newport News, Va.
Whatever the self-styled People Express--or, as it presents itself, PEOPLExpress--may be, it is not legally an airline. It's already been dogged by the tax man and bill collectors. It seems intent on throwing good money after bad in markets most recently abandoned by Southwest Airlines, the always-profitable, rarely wrong masters of smaller-market flying. And it carries the dual marks of Aviation Cain: It is named after an already failed airline and is corporately structured in a way that has a 100 percent failure rate since the dawn of airline deregulation in 1978.
Before People Express is consigned to the big list of dumb, dead airlines, let's give this not-really-an-airline airline its moment. It flies between Newport News and three cities: Newark, Pittsburgh and Boston. It claims it will launch routes to four more cities before the end of August. Introductory one-way fares start at $56, but that doesn't include advanced seat assignments ($15), carry-on bags ($25), checked bags ($20), soft drinks ($2) or coffee or tea ($1). Service is on all-coach, 136-seat Boeing 737 aircraft, some painted in the garish, green PEOPLExpress livery and some not, some outfitted with extra-legroom seats ($59 more) and some not.
Despite a burst of mostly fawning coverage in the general media this week, the first days of flights have attracted distressingly few paying passengers. And looking at the seat-selection maps for the days ahead, some People Express flights have fewer than a dozen chairs full. (Passengers aren't required to claim an assigned seat, so there may be more fliers booked than shown on the maps, but the unseated are surely few and far between.)
At this point, you may be overcome by a sense of deja vu. That's because the current operation is named after People Express Airlines, which had a short, noisy run starting in 1981. It flew cheap from the dirty and dilapidated North Terminal of Newark Airport, charged for everything (50 cents for a beverage, $3 for checked bags), expanded recklessly, collapsed in a heap and hurriedly folded into Continental Airlines in 1987. Until Monday, it was a footnote to history, mourned by few and mostly mentioned as an object lesson in airline-management hubris. No one even bothered to protect the name or service marks. Type http://www.peoplexpress.com now and you're directed to a limousine service in Texas.
Yet someone--in this case, former People Express employee Michael Morisi--decided there was a reason to revive the name. That flies in the face of flying reality. A new airlines named after a fallen carrier doesn't survive long.
(Ironically, the only "successful" revival of an old name is Frontier Airlines. The original Frontier was gobbled in 1986 by none other than People Express. It was revived in 1994, stumbled into bankruptcy, mashed-up with another struggling carrier, spun off and was near death until it was purchased last year by Bill Franke, the former investor behind Spirit Airlines.)
It would be daunting enough if the new People Express only had to overcome the curse of an old airline name. But it also has adopted an operational model that is a proven failure.
People Express tried to speed its launch by buying existing airlines to gain the required governmental operating certificates and approvals. A deal to purchase Xtra Airways, a small charter carrier that once offered scheduled service, fell through last year. Then it tried to buy the assets of Ryan International, a bankrupt charter carrier. The Transportation Department (DOT) scuppered that deal in February. En route to its launch this week, People Express has been fined by the DOT, hit with tax liens and sued by American Express. Morisi, the founder, abruptly departed in December. In May, People Express even withdrew its DOT application for permission to fly.
With no right to operate as an airline, no planes and no crews, how did People Express get in the air on Monday? It cut a deal with Vision Airlines, a charter service that has sporadically and unsuccessfully run its own scheduled flights. Vision is the airline you fly when you book a seat on People Express. Vision supplies the planes and crews and is responsible to the government for safety and operational regimens.
In fact, People Express as currently constituted is nothing more than a ticket agent for Vision's flights. That model—what the industry broadly calls a "wet lease"—has never worked for any start-up carrier in the deregulated era. The arrangement almost always collapses after a few months, usually with the operating carrier and the owner of the brand name squabbling over money. Passengers are inevitably stranded, holding worthless tickets no other carrier will honor.
It could be different for People Express, of course. With so few players in the skies now and so many fliers unhappy with their options, there is room for a new airline. But it probably won't be this one.
ABOUT JOE BRANCATELLI Joe Brancatelli is a publication consultant, which means that he helps media companies start, fix and reposition newspapers, magazines and Web sites. He's also the former executive editor of Frequent Flyer and has been a consultant to or columnist for more business-travel and leisure-travel publishing operations than he can remember. He started his career as a business journalist and created JoeSentMe in the dark days after 9/11 while he was stranded in a hotel room in San Francisco. He lives on the Hudson River in the tourist town of Cold Spring.
THE FINE PRINT This column is Copyright © 2014 American City Business Journals. All rights reserved. Reprinted with permission. JoeSentMe.com is Copyright © 2014 by Joe Brancatelli. All rights reserved.