Word: discounted
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Dates: during 1980-1989
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Behind that seeming resolution of People's difficulties, however, the plot thickened. There were muted signs of a boardroom power struggle in Newark, the airline's headquarters, that might still be unresolved. People's financial woes, meanwhile, could hardly be described as over. At best, the deep-discount airline appeared to have bought additional, limited time in which to become a more traditional, full-service passenger carrier. That would be the very opposite of the strategy that in five years made the carrier's name a byword and irrevocably shook up the economics of U.S. flying...
...more than a year, the wings of high-flying People Express had been drooping under the heat of intense competition. In the first six months of 1986, the revolutionary discount airline lost an estimated $103 million, an alarming deterioration compared with a $5.7 million deficit for the same period last year. Finally, said Donald Burr, 45, People's founder and visionary chairman, "we had to do something." Last week Burr did. In a tersely worded statement he announced the possible upcoming sale of part, "or under certain circumstances even all," of the country's fifth-largest airline, which...
iated against the deep-discount threat with a blizzard of their own special offers. They had on their side a powerful weapon that People lacked: the sophisticated, highly computerized reservation systems linking them with at least 20,000 U.S. travel agents. The systems allowed the airlines to launch myriad discounts, usually on advance purchases with high (as much as 50%) penalties for failure to show up for the seat. For its part, People operated more like a mass-transit company. It offered two cheap daily fares--peak and off-peak--to most destinations, sold few tickets in advance and frequently...
...earned the nickname "People Distress." Its North Terminal center, once deservedly known as "the Pit," has improved over the years, but it still resembles a bus terminal at rush hour. A replacement facility is a year to 18 months away from completion. Horror stories have spread along the discount-fare grapevine of endemic baggage losses on People flights and of travelers stranded for hours in Newark, Denver or San Francisco. Chairman Burr protests that "we're as professional as any airline out there," but the stories have evidently hurt. One People way of fighting back: a two-month-old frequent...
What virtually ensures the continuation of discount fares is the law of supply and demand. In 1978, when the industry was deregulated, U.S. airline capacity amounted to 382 billion so-called seat miles, representing the total number of passenger spaces available multiplied by the total route mileage that could be flown. Today that capacity has reached 547 billion seat miles, a 43% increase. There are plenty of seats, in other words, to go around. Says Julius Maldutis, an airline analyst for Salomon Brothers investment firm: "The airlines are locked into a low-fare environment from which there is no return...