I gave the newly launched People Express nine months before it would fold.
I was a little optimistic in my predictions. The airline suspended flights on September 26. This is not even three months since launch. They promised to return October 16 (which is next week). Yesterday the airline announced it would be now be some time in November before flights resume. Their website is not accepting any bookings.
The airline is promising refunds for all flights. Refunds which will take five to seven business days. Small comfort to anyone who is booked to fly in the next few weeks who has to make new expensive arrangements. Jetblue have offered to assist with alternative arrangements for affected passengers.
Using the name of the popular (but financially unsuccessful) 80’s airline, they had begun flying on June 30, from Newport News in Virginia with airline code V2 to Newark, NJ. West Palm Beach, Fla.; Pittsburgh, PA and Boston, MA.
People Express say they are aware of the damage to their brand saying “We know we disappointed our loyal customers and our community. But we have been working hard to regroup. And the feedback we’ve received has been helpful in our efforts to get it right.” They state that they had carried 55,000 passengers on 517 flights. They have released an “inspirational” promotional video promising to “never give up”. I think it may be too late.
The cause of the suspension was reported to have had its genesis on September 19, when one of its two 737s was damaged by a vendor’s truck at its Newport News hub. This left the carrier with just one 737. People Express has been leasing both of its planes plus pilots and crew from Vision Airlines. Vision had an earlier incident where they had no pilots for a whole day. These have all impacted on “their ability to provide consistently outstanding schedule integrity.”
The problems on further investigation seem deeper.
Vision has attempted to expand before. In 2010, they attempted to fly to 20 destinations from a Florida base. The plan failed and the carrier was charged with grand theft for non payment of passenger fees it had collected. They also were sued for underpaying pilots flying into Middle Eastern war zones on US Government charter flights.
Vision Airlines was reportedly more than $30 million in the red when they started flying from Newport News for People Express. The service was able to start because of an advance of $650 000 to subsidise daily service from Newport News to Boston and Newark, New Jersey provided by The Peninsula Airport Commission. The Commission reportedly didn’t know the amount of Vision’s debt.
People Express and Vision Airlines have “been put on notice” that they need to pay back a percentage of the grant, if service is not restored soon. PEOPLExpress have been searching for another carrier to replace Vision Airlines – ideally one with three planes and yesterday said: “We currently have a tentative agreement with an additional aircraft provider, which will enable us to enhance our platform, including the addition of a third aircraft as a spare. This will alleviate the service issues we have experienced.”
Concerning though, is that there seems to be some confusion over who is actually the People Express chief executive officer.
All of this suggests to me that People Express will be hard pressed to start again. There are many similarities between People Express and the start up Air Australia which flew for just two months. Their demise makes it easy to predict the future for People Express: I cannot see them making it through the US winter. Airlines need more than a vision, hope and a prayer. Capital, sufficient planes, consistent service and a good reputation which People Express seemed to have burnt through. I feel sad for them but this is business.