February 28th 2008
Settling Key Start-up Issues: The People Express Experience
The People Express business plan is notable for its lack ofemphasis on marketing issues. After all, in early 1980 the ideaof a discount airline was new and little tried. Who could besure that consumers would flock to a new airline that offeredcut-rate fares?
But according to Burr, the founders had little concern about that issue. “We felt that a $23 price would blow the market open,” he says. He points out that at Texas International, he had been involved in pioneering off-peak fares and, “When we cut prices to the bone, we were full.”
Where to locate.Other issues were paramount in the minds of the founders, including where to locate the new company’s hub— its base and the place where all flights eventually passed through. Newark, N.J., was first on their list because the airport seemed to be underutilized and was smack in the middle of one of the nation’s most densely populated marketplaces. “We talked about Baltimore, Hartford, New Haven, Oakland, and Kansas City,” Burr recalls. Oakland in particular intrigued them because its airport also seemed to be underutilized and was located in an attractive market. But PSA was already well established in California. In addition, PSA was, according to Burr, “a better-run carrier than you tended to find in the East.” Continue Reading »
