BUDGET-MINDED travelers bound for Europe are packing their bags and heading for Newark airport. That's home base for People Express, an innovative no-frills airline that has just begun service to London for a tempting $149. The fare from Washington, via Newark, will be $169.

How do they do it when other carriers are asking twice as much? To begin with, they fill the planes. Anyone who has tried to get through to the People Express switchboard to reservations knows that it's easier to get a Saturday night ticket to "Return of the Jedi." Even before London landing rights were secured Wednesday, the airline, in a single day, sold 25 percent of all seats available through Sept. 13. Costs are also kept low by charging for optional meals aloft and allowing passengers to bring their own picnics. But who wouldn't prefer to start a holiday with a care package from the delicatessen and a handful of homemade chocolate chip cookies? Small charges for checked baggage reduce prices and provide incentive for careful, minimal packing--the sign of a seasoned traveler.

Sir Freddie Laker was the acknowledged pioneer in no-frills transatlantic travel, but his bold venture was brought down by a combination of high interest rates, recession and a drop in the value of the pound. Antitrust lawyers in the Department of Justice are looking into the question of whether some of Mr. Laker's competitors--higher priced lines that couldn't meet his challenge--didn't have something to do with the demise of his airline as well. The big airlines won't like People Express' London sevice any more than they did that of Freddy Laker. Everyone else, of course, will love it. With a trip to Europe going for a couple of hundred dollars, students, retired people and even people with kids in college won't have to fear sky-high prices when planning a dream vacation. European travel for average working Americans will be a reality, but only if they can get through to reservations.