Five former officials of Texas International Airlines have applied to the Civil Aeronautics Board for the authority to create People Express, a brand-new airline committed to high-frequency, low-fare scheduled air services on the East Coast.
The newly organized airline plans to begin its services from Newark International Airport, fanning out to destinations not more than, 1,000 miles -- or a two-hour flight -- away.
Although it included in its lengthy application 27 illustrative route proposals, including flights to Washington, officers of the new airline say they first would start with routes from Newark to Buffalo;Columbus, Ohio; and Raleigh/Durham, N.C. The airline's organizers plan to use one kind of jet airplane exclusively, either Boeing 737s or McDonnell Douglas DC9s.
Fares on the People Express will be between 41 percent to 55 percent lower than existing coach fares, the airline told the CAB, and will not be restricted by advance reservation, pre-ticketing, minimum/maximum stay or cancellation limits.
A two-tiered pricing system is to be used: All tickets on flights during the business day generally will be priced between about 41 percent and 43 percent will be priced between about 41 percent and 43 percent below existing fares, while all tickets for off-peak travel -- those departing after 7 p.m. on weekends and all flights on Saturday and Sunday -- will be up to 55 percent below existing fares, the airline's organizers said.
as an example , People Express said its peak fare on flights between Newark and Buffalo would be $49 and its off-peak fare $39, compared with the existing coach fare of $86.
"Low prices don't mean low profits, either," Donald C. Burr, chairman and chief executive officer of People Express, said in an interview yesterday. "It is good for the public, but we're not doing it for altruistic purposes. We think it's very much in our interestto have low prices."
Burr and his colleagues in the new venture know that low fares can be profitable from their experience at Texas International. Each of them played key roles, as their CAB application pointed out, in the success of Texas International and it emergence from an almost-bankrupt airline to one of the industry's most aggressive, interesting and successful airlines.
Burr 39, was with Texas International from 1973 until January, most recently serving as its president, chief operating officer and director.
Gerald L. Gitner, 35, who also left TI in January, served most recently as its senior vice president for marketing and planning. He is president and chief operating officer of People Express.
Other key officials are Robert J. McAdoo, 34, who served as TI vice president for information services; Harold J. Pareti, 32, TI staff vice president for governmental affairs and assistant secretary; and Melrose K. Dawsey, 31, executive assistant to the president of TI.
So far, the organizers have raised just shy of $1 million on behalf of the new airline and need a minimum of $6 million, Burr said.
FNCB Capital Corp., a venture capital subsidiary of Citicorp, has put in $200,000. Burr was optimistic that themoney will be raised, a prospect that will be made easier if the CAB acts quickly and favorably on its application.
"We are fit, we've had a lot of experience in the airline industry and are viable people to mount this effort," he said yesterday.
If their application is approved, People Express would be the second new airline created under airline deregulation. The first was Midway Airlines, which flies between Chicago's Midway Airport and five other cities, including Washington.