Low-cost airline with familiar name hopes to fly
2012/02/14NORFOLK, Va. (AP) -- The name PeoplExpress conjures up thoughts of cheap fares, packed planes and bare-bones service.
If regulators agree, the name will be back this summer, attached to an airline that hopes to borrow from the old playbook while avoiding some of the mistakes that doomed one of the pioneers of the no frills airline business.
PeoplExpress Airlines announced Monday that it will be headquartered at Newport News-Williamsburg International Airport in southeastern Virginia. The airline plans to offer flights on the East Coast this summer. But a successful launch is far from a sure thing. It still needs approval from the U.S. government. And it still needs to secure financing.
Initial destinations are expected to be Pittsburgh, Newark, N.J. and West Palm Beach, Fla. Chief Operating Officer Michael Morisi, who worked at the original airline, says the airline won't ever fly to large cities served by other airlines. The original PeoplExpress called overexpansion one of its fatal mistakes. At the time, Morisi was responsible for opening up several domestic and international destinations, including London and Los Angeles.
The old PeoplExpress was once the country's fifth largest airline. It flew from 1981 to 1987 and was known for offering fares for as low as $19 while turning a profit. But once American introduced "Ultimate Super Saver" fares in 1985 the airline struggled. Continental Airlines eventually swallowed it up. Since then, more than 100 airlines have filed for bankruptcy or stopped operating altogether.
Continental did not maintain the name to PeoplExpress, allowing Morisi to register for it.
Morisi says he intends to serve niche markets that are currently underserved or those that have lost service altogether because of industry consolidation. A number of bigger airlines have pulled out of smaller markets since the recession because flying there wasn't profitable.
"I think we can build a very nice operation serving dozens of cities and never really encroach on some of the major hub cities that other carriers are dominant in," he said in an interview.
Newport News is losing AirTran service next month as AirTran's parent Southwest Airlines Co. redirects flights to other cities. The region has also offered financial incentives for new airlines to roost.
But although some bigger carriers have left room for new airlines to start service, the industry remains highly competitive. If one airline sees another building up business, it's likely to target those cities, and try to win them back.
"New airlines tend to underestimate the degree and gravity of that competitive response." airline consultant Robert Mann said.
Morisi, who lives in Chesapeake, Va., said he thinks PeoplExpress can beat the odds and become successful through a combination of factors. Among them, he said the airline aims aiming to have a non-union workforce of employees — a strategy employed by the old PeoplExpress.
Southwest, which flies more passengers than any other airline, is also an influence: PeoplExpress said it won't charge for checked bags. It also plans to buy only Boeing 737s — just like the original PeoplExpress did — to keep maintenance costs low. That was Southwest's only plane until it bought AirTran last year.
Also, by using airplanes that have 158 seats, Morisi said he can offer lower fares than regional airlines that may only have 70 or 80 seats.
"There's no question. We will be significantly lower-priced than our competitors," he said.
He said the new airline plans to have an initial public offering to raise about $50 million sometime this spring.
Morisi said the airline is also planning on offering unique foods on board flights that will highlight the regional fare of the cities the airline serves. The same goes for beer, where he plans to offer regional microbrews on board.
He said he's learned lessons from PeoplExpress' past.
After PeoplExpress, Morisi remained in the airline industry for several years in the early 1990s, where he was chief operating officer of the charter airline service Leisure Air.
He said the demise of that airline occurred after the Federal Aviation Administration grounded its fleet of DC-10s due to some problems with maintenance records. He said United Airlines was responsible for maintaining the planes.
Following his job at Leisure Air, Morisi said he worked in business development, including as a Department of Homeland Security contractor. He said his company developed security for ports and airports.
He said he got the urge to recreate PeoplExpress because he traveled a lot for work and was frustrated with the flying experience. In April, as the airline's 30th anniversary approached he said he began to put together a team to bring back PeoplExpress.
The company includes former PeoplExpress executives who are serving on its board, although that team does not include Donald C. Burr, the airline's founder.
Morisi said he had spoken with Burr about his plans for the airline and he said that Burr had given him a positive response.
In a December interview with The Associated Press, Burr said the airline industry will continue to attract people willing to take risks.
"It's not making toilet paper," Burr said at the time. "It's a very sexy business. I don't think that necessarily attracts the best and brightest, which probably go to Silicon Valley and universities and medicine ... that's probably part of why the industry has problems."
Morisi said a CEO has been selected, but won't be publicly named until April because that person is a former CEO for another airline.
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Online: PeopleExpress Airlines www.flypex.com
Bomkamp reported from New York.
Brock Vergakis can be reached at www.twitter.com/BrockVergakis. Samantha Bomkamp can be reached at www.twitter.com/SamWillTravel.
