People Express Airlines

People Express Airlines, as the name indicates was a company of people : Customers and Employees. Its rapid growth in the Airlines sector was induced due to following reasons.

1.    A conducive environment for employees :  Mr. Donald C. Burr, Founder, and CEO of People Express Airlines, had always tried to make the organization as a place to learn. He always kept his people and customer to be most important and valuable part. He had given his employees freedom to take decisions as long as they are in line with the six percepts company had designed. To increase the moral, he had renamed positions of a flight attendant to Customer Relations Manager and Pilots to be Flight Managers. PE always had a work culture where each of the employees was responsible, accountable and committed.

2.    Low and Affordable pricing : Mr. Burr had kept PE’s pricing to be about 60% to 80% less in nonpeak times and 35% to 55% less during peak hours in comparison with competitors. PE’s low pricing scheme had attracted middlemen and business people both.

3.    Wise selection of routes :  PE Airlines had started their operation from the routes on which big four carriers were not present. This move had given them a chance to establish and gain customer’s trust through the services.

4.    Strong Leadership : PE was founded under the strong leadership of Mr. Burr who have always kept his people and customers at the highest priority. Whenever there were turmoil situations, He himself had led from the front. For example, conduction of leadership development training.

5.    Availability of pilots and flight attendants

Cause for rapid decline :

1.    Operational Failure : Due to their pricing scheme, People Express got unprecedented demand. For tackling such demand, People express was not ready due to lack of resources. Rather than holding, Mr. Burr had taken the aggressive approach to meet the demands. This had resulted into heavy workload on employees. Employees criticized organizations’ cross utilization scheme. They often got irritated. Pilots protested for doing the paperwork.

2.    Lack of Technology: One of the most prominent reasons for PE’s failure was the unavailability of yield management software. They were doing prior bookings. Due to which customer turnout was minimum for them among various airlines. To tackle this they overbooked but this led them to some cases where they had 20 to 30 extra people. This also created customer dissatisfaction. Their landing gate could not handle the unprecedented crowd.

3.    Failure in tackling real competition :  To tackle PE’s low-cost strategy, big carriers like Northwest and United also reduced their pricing to the level of PE’s cost. American Airlines even sold the seats at 20% rate in comparison with People Express. They used the concept of yield management to make the process viable. This way PE started losing customers.