Transportation

Why PEOPLExpress Closed

Douglas A. McIntyre

In an era in which almost all U.S. airlines flourish, a new one, PEOPLExpress, could not make it. The company announced it has suspended service. Like many business enterprises that halt operations, PEOPLExpress said it would be back. In a world crowded by carriers, that is not a good bet.

PEOPLExpress management wrote:

PEOPLExpress today announced that it is temporarily suspending service effective immediately and plans to resume service on or about Oct. 16.

Recent aircraft and crew availability and maintenance issues, including an aircraft recently damaged by a vendor’s truck, an engine change and a lack of a planned spare aircraft, have made it challenging to operate a full schedule, preventing us from delivering the passenger experience we are striving for.

We are currently processing refunds for passengers for flights booked through Oct. 15, which will take five to seven business days. For reservations beyond Oct. 15, passengers will receive a notification by e-mail as soon as our service resumption plans are in place.

PEOPLExpress has successfully served 55,000 passengers on 817 flights since launching service on June 30, demonstrating the need for additional non-stop air service to underserved markets as a result of airline industry consolidation.

Our customers have been very receptive and supportive of our service from the beginning but not being able to complete all of our scheduled flights has been inconsistent with our brand promise to provide a fun, creative and innovative approach to air travel. This difficult business decision affects thousands of loyal customers, and we apologize for the sudden nature of our temporary suspension and thank people for their understanding and support.

We are still committed to restoring the concepts of respect, value and excitement to the air travel experience but to do so successfully we need to enhance our platform to operate aircraft not just safely but also with the ability to provide consistently outstanding schedule integrity.

Among the headwinds the company faces are its size and route systems. It flew from Newport News into extremely competitive markets, which include Boston, New York/Newark, Atlanta, West Palm Beach and Tampa. Each of these is a large destination for at least one the country’s four largest airlines: Delta Air Lines Inc. (NYSE: DAL), United Continental Holdings Inc. (NYSE: UAL), American Airlines Group Inc. (NASDAQ: AAL) and Southwest Airlines Co. (NYSE: LUV).

Although there are a few upstart airlines like JetBlue Airways Corp. (NASDAQ: JBLU), which has taken a piece of some regions across the country, the industry is too entrenched for such a move to be more than a long shot.

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