Low-cost airline with familiar name hopes to fly

NORFOLK, Va.—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.Continued...

Boston News/Aviation