4/30/1981: PEOPLExpress Commences Operations

DALLAS – Today, in 1981, American low-cost carrier PEOPLExpress (PE) began service with a Boeing 737 flight from Newark to Buffalo, Columbus, and Norfolk.

People Express Airlines, also known as PEOPLExpress, operated until 1987 when it was absorbed by Continental Airlines. The airline’s headquarters were located in Newark International Airport (EWR) in Newark, New Jersey.

Don Burr and many others formed the company after resigning from Frank Lorenzo’s Texas International to do so. Inspired by Freddie Laker, who had gained international attention in the 1970s with forays into low-cost travel in Europe, the group decided to lease space at EWR’s North Terminal (later Terminal C).

Launch of PEOPLExpress

On April 30, 1981, exactly one month after Ronald Reagan was shot, PE began service with Boeing 737 flights from Newark to Buffalo, Columbus, and Norfolk; a month later, Jacksonville and Cleveland Hopkins were added.

The LCC had 42-weekday departures from EWR in December to Baltimore/Washington, Boston Logan, Burlington, Buffalo Niagara, Port Columbus, Jacksonville, Norfolk, Sarasota-Bradenton, Syracuse Hancock, and Palm Beach, as well as several flights across the hub-and-spokes’ periphery.

two years later, with a leased Boeing 747-227B previously owned by Braniff International Airways, PE began non-stop flights from Newark to London’s Gatwick Airport (LGW) on May 26, 1983. All of the airline’s flights were sold out almost immediately.

The 1978 Airline Deregulation Act

PEOPLExpress was really all about deregulation. The 1978 Airline Deregulation Act removed, among other things, government control over routes, fares, and the market entry of new airlines. Prior to that, the feds dictated which airlines could fly which routes and how much they had to charge customers.

Thus, marketing focused on things other than price: Braniff famously painted its planes in unusual colors, airline ads talked about the prettiness of their flight attendants and the quality of their in-flight meals. The exotic destinations they flew to. Things like that.

With deregulation, anyone with financial backing could start an airline. And entrepreneurs realized there was a huge untapped market of people who wanted to fly but had never been able to afford the government-mandated fares.

Thus, a door was opened for an airline like PE – a door that is still open today for the myriad of low-cost carriers we know and love around the world. Into this opportunity stepped Don Burr and company.

A New Low-cost Experience in the US

The airline’s fare structure was streamlined. Except for slightly lower “off-peak” fares, all seats on a route were sold at the same price. Except for “Premium Class” on Boeing 747 flights, which featured two-class service, all seats were in economy class. Early in the flight, fares were paid in cash on the plane.

Additionally, passengers were allowed to bring one free carry-on bag, with each checked bag costing US$3.00. PE was the first airline in the United States to charge for each checked bag. Customers who wanted food or drinks also paid a small fee to PE.

The rise of PE was part of the yuppie, Dress for Success, and the you-can-have-it-all attitude of the 80s. Baby boomers were coming into their prime and making money; Wall Street was roaring, and the Reagan years were beginning: Max Headroom, the cola wars, the advent of MTV, and Mary Lou Retton vaulting to perfection.

In its first full year of operation, 1982, PE flew slightly over 1.5 billion passenger revenue miles (PRM). By 1985, that number had increased to nearly 11 billion PRM. That is mind-boggling growth.

Trans-Atlantic Flights, Acquisitions

In the spring of 1983, PE went trans-Atlantic, offering US$149 one-way flights from EWR to LGW on the leased Braniff Jumbo. The route was an instant success, with all scheduled flights selling out within 24 hours. A slightly more expensive “premium class” was offered on these Boeing 747 flights. And, eventually, in 1986, PE offered a truly first-class experience on the jumbo.

In 1985, determined to keep expanding and building a national presence, PE bought Frontier Airlines (FA) based in Denver and connected that hub to EWR with Boeing 747 flights. PE also bought out two commuter airlines, Britt Airways in the U.S. Midwest and Provincetown-Boston Airlines, which flew in New England and Florida.

However, the buying spree sent the airline deep into debt. Also, legacy carriers had become savvy in their offerings and were becoming more competitive with PE’s pricing and service levels.

In addition, the cultural differences with FA – requiring a change from being a full-service carrier to being a discount airline with a no-frills mentality – caused turmoil and alienated passengers and employees.

Furthermore, PE had a computer reservation system, but it was an in-house system, with the airline opting not to pay the fees for the SABRE reservations systems used by United Airlines (UA), Apollo, or American Airlines (AA). Thus, travel agents were all but useless to the carrier. It is estimated that this caused an average of 6,000 people per day to miss out on PE’s flights.

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Flying into the Sunset

The airline attempted to sell FA to UA in 1986, but the deal fell through. However, PE continued to search for a buyer to buy all of itself or just parts.

In August 1986, FA filed for bankruptcy and ceased operations. The following month, Texas Air Corporation purchased PE and also gained FA’s assets. Both carriers (and New York Air) were merged into Continental. This helped strengthen Continental’s route network quite a bit as the airline emerged from bankruptcy just a few months earlier.

On February 1, 1987, FA, New York Air, and PE ceased to exist as they were officially part of Continental Airlines.

Legacy

One can debate endlessly what might have happened had PE remained true to its original plan. Could it have survived by being a niche player flying primarily on secondary routes? Had it not acquired FA, could it have remained solvent and thrived into the 90s? Perhaps.

Other low-cost carriers, most notably Southwest (WN), found a pathway to success. But the 80s were not about restraint. We were ‘Born in the USA’ and anything was possible for us. Until it wasn’t. And the legacy of PE reflects the ideals and, ultimately, the realities of its time.

On an interesting note, a few years ago PE ex-employees had a reunion after 35 years. More than 1,000 former team members met at the Marriott Hotel at EWR for a weekend get-together to remember and celebrate what can only be described as an airline ahead of its time.

“It was beyond wonderful. Don was there,” recalls an attendee of the reunion. They plan to do it again next April; it was postponed this year due to the pandemic.

Featured image is of a PE Boeing 737. Article sources: Remembering PEOPLExpress, by John Huston/Airways; 30 Years Ago: People Express Merged Into Continental Airlines, the Airchive.

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