Why PEOPLExpress Closed

By Douglas A. McIntyre Published Sep 27, 8:35AM EDT

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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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About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.